Apple announced discounts on iPhones and other items in China after it reported a small drop in quarterly revenue in China on Thursday.
Some analysts have said the US tech giant could face a drop in demand given the weak economy and decline in smartphone sales in the second trimester.
The iPhone maker said demand had picked up in mid-June after the Covid lockdown in Shanghai and a number of other cities, which hit retail spending for a couple of months, ended.
apple‘s global revenue rose 2%, beating estimates, and the company said there had been no slowdown in global iPhone demand despite macroeconomic indicators turning negative.
apple Chief Tim Cook blamed the drop in China’s revenue on strict lockdowns that forced millions to stay at home and hit the Chinese economy.
“We saw lower demand based on the Covid lockdowns in the affected cities. And we saw a pick-up in those same cities towards the end of the quarter in the June period,” he said.
China’s tight restrictions to stamp out Covid have undermined the recovery of the world’s second largest economy, with consumer confidence hovers around historic lowsthe slowdown in private investment and youth unemployment at a record 19.3%, prompting calls for more urgent government stimulus.
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Still, the company is more insulated from a weak economy because it is the only leading brand that offers expensive devices, analysts said.
appleThe main competitor in the high-end segment, Huawei, has seen sales collapse after US sanctions prevented it from sourcing key components. Honor, a Huawei spin-off, is growing fast, but has yet to enter the high-end market.
Global Chinese smartphone sales between April and June fell 14% year-on-year, with volumes hitting a decade low. Counterpoint research he said on Wednesday.
appleChina’s market share rose slightly to 15.5 percent in the quarter, although its sales volumes fell 5.8 percent, Counterpoint said, a smaller blow compared to Oppo, Xiaomi and I live
IDC analyst Will Wong said that unlike late 2020, when demand for phones in China surged after the first Covid lockdown, phone sales are expected to slow.
“It’s not just the lockdown, but other factors, such as the government’s crackdown on technology and the slowdown in the housing market, are having a negative effect on consumer sentiment,” he said.
apple is scheduled to release a new iPhone model in the fall. But sales of the new device in China are unlikely to top last year’s iPhone 13, Canalys analyst Nicole Peng said.
“High-end phone sales tend to be resilient in China, though apple may worry that demand itself is weakening.”
Reuters with additional editing by Jim Pollard
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Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd newspapers in Sydney, Perth, London and Melbourne before traveling around Southeast Asia in the late 1990s. He was senior editor of The Nation for over 17 years and has a family in Bangkok.