According to the earnings report for the first quarter, Apple’s revenue has declined by 4.3%. The major revenue source, the iPhone, has witnessed a drop of 10.5% to $46 billion.
Experts believe that the decline was primarily observed in the Asian region. The Chinese market, which has been a significant growth driver for Apple in recent years, has experienced an 8.1% year-over-year revenue decline to $16.4 billion.
“I continue to be very bullish on China over the long term,” said CEO Tim Cook during the earnings call.
“I don’t know what each quarter or each week brings, but over the long haul, I am very, very positive,” Cook emphasized.
The tech billionaire added that he had a “great visit” to China earlier this year and that the public reception to the new Apple stores in Shanghai was “very strong”.
CEO Tim Cook maintains a positive outlook on the Chinese market
However, Cook also acknowledged the challenges that Apple faces in China, including competition from domestic rivals like Huawei.
According to Counterpoint Research, iPhone sales in China have declined by 19.1% in the first quarter this year, partly due to Huawei’s resurgence. Huawei’s new offerings have directly impacted the high-end smartphone segment in the country.
Huawei’s device sales grew by 69.7% while the overall smartphone sales in China increased by 1.5% year-over-year.
“The good news is that pent-up demand for the upcoming AI-powered iPhone 16 should get Apple back to growth in China,” said Dan Ives, managing director at Wedbush Securities. He further noted that Huawei’s roll-out of 5G devices amidst lackluster demand for the iPhone 15 remains a “wild card” for Apple.
Apart from China, Japan also recorded a significant decline in iPhone sales, with a drop of 12.7% to $6.3 billion. The rest of the Asia Pacific region saw the steepest revenue decline, falling by 17.2% to $6.7 billion.
In contrast, Apple set a revenue record in Indonesia in the first quarter. Cook called the Southeast Asian country “one of our highest potential markets”.
Cook’s comment follows his visit to Indonesia in April, during which the Apple chief said the company would “look at” manufacturing in the country.
The number of Apple suppliers from China has been increasing over the years
Apple also grew “very strongly in double digits” and set a March quarter revenue record in India.
“I see India as a huge opportunity. It is a major focus for Apple from both an operations and a supply chain point of view,” said Tim Cook.
Despite expanding its manufacturing footprint in Southeast Asia and India, Apple continues to view China as a critical market. Looking at the list of Apple’s major suppliers, the number of suppliers from China has increased to 52 in 2023. This is up from 48 a year ago.
In the face of headwinds, Apple has just announced its largest ever stock buyback.
Apple’s board of directors has authorized an additional $110 billion for share repurchases and raised the quarterly dividend for the 12th consecutive year, said CFO Luca Maestri.
The buyback plan sent Apple’s shares up nearly 7% in extended trading after the earnings call.
