The Apple Inc. (NASDAQ: AAPL) iPhone has done well in China for years. However, a recent research report shows that it has fallen behind local companies such as Vivo, Oppo, Honor, and Huawei. China is the largest smartphone market in the world, with over 900 million users. The U.S. number is barely a third of that.
24/7 Wall St. Key Points:
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Apple Inc. (NASDAQ: AAPL) reportedly may turn to local companies to jumpstart sales of the new iPhone 16 in China.
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Investors will be watching the numbers from the world’s largest smartphone market.
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Apple may turn to local companies to jumpstart sales of the new iPhone 16. According to Reuters, “Apple is in talks with Tencent and TikTok owner ByteDance about integrating their artificial intelligence models into iPhones sold in China.” Competition for AI-driven products in China is already fierce. This means that Apple would come to the market fairly late. iPhones sold in China do not include the AI features of iPhones sold in the United States, which is a substantial weakness.
A review of Apple’s latest earnings shows how critical China’s slowing revenue growth has become. Greater China revenue was 15% of the company’s $94.9 billion total in the most recent quarter. Its total revenue rose 6%. Greater China revenue fell by a small fraction to $15.3 billion.
Apple’s shares have posted a mediocre performance this year, up 28%. That compares to the S&P 500’s gain of 24%.
Apple’s next quarterly revenue release will contain the company’s holiday results and will be the first full quarter during which the iPhone 16 was available. While those figures may be critical for investors, the numbers from China will be carefully watched.
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