China sales are critical for Apple Inc.’s (NASDAQ: AAPL) global revenue growth. It is the largest smartphone market, with about 950 million smartphone users. The number is about tripe, what it is like in America. The Chinese may block the sale of the iPhone 16 because of its AI software.
According to the FT, the central government said that foreign companies would need to undergo a “difficult and long process” of approval to sell AI products in China. An official from the nation’s Cyberspace Administration of China indicated that Apple and other outside tech firms must find Chinese partners to get faster product approval. Apple may need to use software from local companies to speed up approval of iPhone 16 sales. The large Chinese tech company Baidu may partner with Apple to overcome this hurdle.
Apple’s China revenue has held back its total global revenue. Greater China contributed 16% of Apple’s total revenue in the most recently reported quarter. However, at $15 billion, China’s number was flat in the same quarter as the year before. Apple’s total revenue rose 6% to $95 billion.
Apple’s problems in China may be why its stock has underperformed the market this year. Apple shares are up 20%, while the S&P 500 is 25% higher. If Apple’s China trouble grows, its underperformance could get worse.
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