Apple’s iPhone X helped drive an ongoing record-breaking quarter for the company that saw it take a $13.5 billion profit, at least partly on the strength of its new flagship device in China. The Chinese smartphone market has been called “a holy grail” for Apple as consumers and businesses make up over 90% of its revenue there.,
The “smartphone profit share 2021” is a prediction that Apple will take the lead in China, and help drive record profits.
Apple Inc.’s AAPL 5.84 percent latest record holiday quarter was fueled in part by anticipation for the iPhone 13 in China, where local Huawei Technologies Co. has seen its market share decrease as a result of US sanctions.
The Cupertino, Calif.-based computer giant said Thursday that sales from Greater China increased by 21% to a record $25.8 billion in the quarter ended in December. This surpassed sales growth of 11% to $124 billion, the company’s smallest year-over-year increase in more than a year.
“The products are resonating,” said Tim Cook, Apple’s CEO, in an interview.
It’s a significant turn of events for Apple and Mr. Cook, who in January 2019 took the unusual step of reducing the company’s quarterly revenue projection due to a drop in iPhone sales in China.
At the time, the corporation was up against Huawei’s products, which were perceived as becoming more advanced while being less costly. An unexpected downturn in the country’s economy, widely ascribed at the time to trade disputes with the United States, exacerbated Apple’s situation.
Since the iPhone 12 with 5G cellular connection debuted in late 2020, there have been signs of Apple’s enhanced China performance. When the iPhone 13 range was unveiled in September, they picked up speed. According to Counterpoint Research, the iPhone 13 ascended to first position in China within its first week on the sale.
Strong sales continued in the last three months of 2021, enabling the firm to take over the country’s top spot, with 23 percent of the market compared to 16 percent a year earlier.
Meanwhile, Huawei, previously Apple’s main competitor in China’s premium smartphone market, has dropped to 7% of the market from 23%. Huawei’s ability to acquire processors and use American software, including as Alphabet Inc.’s Android operating system, has been hampered by US sanctions, decreasing its supply of phones and encouraging consumers to abandon the brand.
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Customers enter a Huawei store in Shanghai last year; US sanctions have harmed the Chinese business.
Qilai Shen/Bloomberg News photo
According to Counterpoint, Apple was last No. 1 in China in the last three months of 2015 with its iPhone 6 model range, which featured the first large-screen version of the phone. In late 2014, Apple released the iPhone 6.
According to Canalys, Apple surpassed Samsung as the most popular smartphone in China in the last three months of 2021, with unit sales up 40% from a year earlier to 21.5 million. This increase surpassed the broader China market, which grew by 3% over the same time period while only increasing by 1% to 333 million units in 2021 compared to 2020. The market was still down more than 10% from pre-Covid-19 sales in 2019.
When the iPhone 13 range, which includes faster CPUs and cameras than the iPhone 12, was revealed, it was met with astonishment in China. Consumers flooded social media with praise for the company’s decision to keep the pricing consistent with the iPhone 12 models despite increased expenses that had pushed up the cost of other consumer items.
According to Counterpoint analyst Ethan Qi, the iPhone benefitted from a lack of high-end competition among Android products on the market. “For smartphones over $800, there’s less competition from the Android camp, and some past Huawei smartphone owners have migrated to iPhone,” he added.
Everything worked in Apple’s favor. The corporation reported a 20 percent increase in overall earnings from October to December, bringing the total to a new high of $34.6 billion. Apple’s home market in the Americas had an 11% increase in revenues to $51.5 billion, maintaining its position as the company’s most profitable area.
The battery life of the iPhone 13 Mini and iPhone 13 has been improved, and new camera techniques have been included. The screens on the iPhone 13 Pros are brighter and quicker. With Series 7, Apple Watch has a bigger screen. In addition, Apple has updated the iPad Mini. The autumn schedule is highlighted by Joanna Stern of the Wall Street Journal. Laura Kammermann provided the artwork for this piece. (This article was first published in September.)
China’s expansion, according to Wedbush analyst Dan Ives, is “the gasoline in the motor” for Apple.
The corporation does not divide its product lines into geographical regions. Mr. Cook, on the other hand, said that the increase in China is due to more than just the iPhone, claiming that the company’s product lines are improving and that Mac computers and wearables are doing well.
Mr. Cook stated, “We’re extending the amount of clients we can speak to and sell to, and I couldn’t be more positive.”
The fact that the iPhone 13 range is so similar in design to the iPhone 12 series adds to the iPhone 13’s popularity in China. The iPhone 12 range was widely touted for its technical advancements, including the first time it offered 5G cellular connection.
Global iPhone sales increased 9% year over year to $71.6 billion in the December quarter, topping Wall Street projections of a 3% increase, although at a slower pace than the iPhone 12 lineup’s advances. Analysts predict that iPhone revenue would increase by less than 1% this fiscal year, compared to the previous year, when sales increased by 39% and helped Apple have its best year ever.
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Sales of the iPhone often decline in the years after a major debut, such as the iPhone 12. For example, between fiscal 2015 and 2019, China revenue increased in the first quarters before declining in the subsequent quarters.
Mr. Cook stated in the interview that comparing previous iPhone cycles is tough since they are all distinct, adding that the iPhone X only had one high-end model, but the iPhone 13 includes both Pro and Pro Max variants.
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Tim Higgins can be reached at Tim.H[email protected], and Yang Jie can be reached at [email protected].
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