Apple's Crippled China Sales

"According to tech research firm Counterpoint, the sales of Apple Inc. ( NASDAQ: AAPL) iPhones in China fell 6% in the first eight weeks of the third quarter. This would not be worrisome, except that it breaks a string of better sales for Apple during this period. The China market dropped 2% in total over the same timeframe. Perhaps more concerning is that Apple now ranks sixth in market share (12%) in the world's largest smartphone market, which is estimated to have a billion owners."

"Global smartphone giant Samsung was ahead of Apple, as were local companies Xiaomi, Oppo, Huawei, and Vivo. Each of these has some level of artificial intelligence (AI) in its operating system. Apple is not expected to have its own AI product until next year. Also, it is not that many years ago that local companies were less of a threat. However, Counterpoint does not think AI is the major reason people buy smartphones now, though the fact that Apple lags is still a significant worry."

"The lingering problem for Apple is more what iPhone 17 sales will be like for the balance of the year. It is not unlike its U.S. problem. At some point, AI features become among the primary reasons, if not the primary one, why people upgrade their phones from one generation to another. Apple's "Greater China" sales are barely growing. They were up from $14.7 billion in the second quarter calendar quarter last year to $15.4 billion."

Tech research firm Counterpoint reports iPhone sales in China fell 6% in the first eight weeks of the third quarter, while the overall China smartphone market dropped 2% over the same period. Apple now ranks sixth in China with about 12% market share among roughly a billion smartphone owners. Samsung, Xiaomi, Oppo, Huawei, and Vivo lead and each include some level of AI in their operating systems. Apple is not expected to release its own AI product until next year. Greater China sales rose modestly from $14.7 billion to $15.4 billion, versus $41.2 billion in American sales, underscoring the need for stronger Chinese performance and the upcoming iPhone 17's importance.

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