Revenue losses in China are tapering off for Apple despite the ongoing U.S.-China trade war and increased competition from Huawei, CNBC reported on Thursday (Oct. 31).
Net sales in China reached $11.13 billion in the fourth quarter, a year-on-year decline of 2.4 percent. In June, the decline was 4.1 percent and in March, 21.5 percent.
Analysts cautioned that without a 5G phone available yet, Apple could be looking at more declines as China changes over to the higher-speed networks.
On an earnings call on Wednesday (Oct. 30), Apple CEO Tim Cook said there were a number of reasons for the uptick, pointing to reduced trade tensions and new products being “extremely well received” in China, the news outlet reported.
“The things that we’ve done from a pricing and monthly payments point of view and trade-in — getting the trade-in program up and running — all of these things have had moved the dial,” Cook said.
“I would also say, it’s not all about the iPhone in China. The services area grew double-digit. We began to see more gaming approvals in the quarter, or I should say some key gaming approvals. It’s not all about quantity, but about which ones. We saw that. Also wearables — wearables are doing so great at a company level. They’re doing even better in China. And so lots of positives there,” he said on the call.
Only regulator-approved video games can be released in China, which is essential to Apple’s App Store revenue in the services segment. Products like iCloud subscriptions and wearables were financial drivers in 4Q.
New tariffs are scheduled to hit in December that will affect the iPhone, which is the biggest revenue driver in Apple’s overall sales.
There have been signs, however, that the U.S. and China could be closer to signing an interim trade agreement.
Apple is looking to roll out three 5G iPhone models powered by Qualcomm, sources told Nikkei Asian Review on Wednesday (Oct. 30).
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