Apple’s China Problem

By Douglas A. McIntyre Published Jun 20, 6:40AM EDT

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Only a small portion of Apple Inc. (NASDAQ: AAPL | AAPL Price Prediction) revenue comes from China, a critical market.
The iPhone maker has a lot of competition there.

Apple Inc. (NASDAQ: AAPL) will announce earnings shortly. Investors will dig through revenue, earnings, and, especially, iPhone sales. The iPhone still brings in about half of Apple’s revenue. Although the results will not show up in the quarter about to be announced, the AI-powered iPhone 16 is critical to the company’s calendar-year figures. What will get less attention, but is nearly as important, is the revenue line Apple calls “Greater China.”

Several analysts have pointed out that it is hard to forecast how an AI-enabled smartphone will sell in China. Before that, the company has to show its overall global performance before the iPhone 16. While China is the world’s largest smartphone market by far, it was only 17% of Apple’s revenue, at $16.3 billion in the most recent quarter, down from $17.8 billion in the same quarter a year ago.

Early in the year, estimates were that its sales in China had fallen. Research firm Counterpoint said the drop was 24% year over year in the first six weeks. When Apple announced earnings, that figure seemed like an exaggeration.

The real challenge the company has not been able to overcome is that in a nation with over a billion smartphones, local companies, led by Oppo, Huawei, Xiaomi, and Vivo, have locked up a huge market share, which they have not given up. This alone will make it hard for Apple to show improved performance in a country where it has to.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.