Apple should brace itself for a softening of demand in China as buyers reduce spending in an underperforming economy, several analysts said on Friday, after the iPhone manufacturer said demand had risen in the middle of June following COVID-19 lockdowns had slowed sales.
The creator of the iPhone revealed on Thursday that quarterly revenue in Greater China dropped by 1 percent, putting an end to a string of successful quarters in the region.
It was estimated that Apple’s revenue would rise by 2 percent. Despite a downturn in macroeconomic indicators, the company reported that global demand for iPhones had remained steady at record levels.
Apple CEO Tim Cook blamed the reduction in Greater China income on the draconian lockdowns in Chinese cities, which drove millions of people to stay at home and devastated the Chinese economy.
There was a decrease in demand because of the COVID lockdowns in the cities that were impacted. It’s also worth noting that these cities rebounded at the conclusion of the quarter, “in the June time range.”
COVID’s rigorous controls have stifled a rebound in China’s second-largest economy, with consumer confidence remaining at record lows, private investment faltering and youth unemployment at a record 19.3 percent, prompting calls for more urgent government intervention.
Apple announced discounts on iPhones and other devices were announced this week by Apple for Chinese customers, a move it makes when sales are poor.
As a result of this, analysts believe that the company is better protected from a sluggish economy because it is the only major brand to provide high-end smartphones.
As a result, Apple’s main high-end competitor, Huawei, has seen its sales plummet as U.S. sanctions have blocked it from obtaining essential components. Even as it grows, Honor has yet to make its imprint on the high-end smartphone market.
Counterpoint Research said on Wednesday that overall Chinese smartphone sales in April-June plummeted 14.2 percent on year and volume touched a decade low.
Despite a 5.8% decline in sales volume, Apple’s market share in China grew marginally to 15.5 percent in the quarter, Counterpoint claimed, a smaller blow compared with Oppo, Xiaomi, and vivo.
According to Will Wong, an analyst at IDC, unlike in late 2020, when demand for phones in China increased after the initial COVID shutdown, phone sales are projected to decrease in the coming years.
Other issues, such as the government’s crackdown on technology and the slump in the real estate market, all have a negative influence on consumer sentiment, he said. He said.
In the fall, Apple is expected to unveil a new iPhone model.
However, Canalys analyst Nicole Peng predicts that sales of the new handset in China will be below those of the iPhone 13 from last year.
China’s high-end phone market is generally strong, but Apple may be concerned about diminishing demand.