Business / Companies

Apple earnings get China boost

By GAO YUAN (China Daily) Updated: 2015-10-29 07:51

Apple earnings get China boost

Apple Inc's CEO Tim Cook waves to the audience after a media event in San Francisco. Cook introduced a fair number of new devices at the event. [Photo/Agencies]

China continued to be the mainstay for tech giant Apple Inc, with a sizable chunk of its fourth-quarter revenues coming from the country amid a slowdown in demand.

The United States company said on Wednesday that China accounted for $12.5 billion of the $51.5 billion revenue it earned for the fiscal quarter that ended in September.

The company said revenue in China had nearly doubled from the same period a year earlier, but showed a slight decline from the previous quarter.

Strong sales of the flagship iPhone 6S/6S Plus in the country boosted the company's profit by 31 percent from the corresponding period last year.

After completing a four-day visit to China last week, CEO Tim Cook pledged continuous investment in the country. He did not give details of the planned investment.

"We anticipate enormous changes in China over the next several years," Cook said. "We are reasonably well-positioned (in China) and I am sure that we can do better."

The company, however, did not disclose the exact sales numbers for iPhones in the country.

Apple shares remained lackluster in New York on Tuesday and were traded at about $114.55 per share.

The growing middle class in China has given Apple a rapidly increasing customer base. Apple opened its 25th retail store in the country on Saturday in Dalian, Liaoning province.

The company has been planning to add more bricks-and-mortar stores in the second-and third-tier cities.

But with China having fewer first-time smartphone users and local competition fast closing in, Apple is set to face heavier headwinds.

Nicole Peng, director of the Shanghai-based research firm Canalys China, said the fastest-growing handset segment in China is the 1,200 yuan ($180) to 3,000 yuan, where Chinese vendors such as Huawei Technologies Co Ltd and Xiaomi Corp have an established presence.

In the above-3,000 yuan price range, where the iPhone 6S series is placed, demand is cooling.

"I think consumers in China are now more mature when it comes to smartphone choices," Peng said. "Most of the customers look for quality as well as the brand value."

The cheapest iPhone 6S model is priced at 5,288 yuan in China.

Huawei, a Chinese brand which launched a flagship model with an above-4,000 yuan price tag two months ago, is quietly reducing the pricing back to the 3,000-4,000 yuan range.

Because of the temporarily withdrawal of Huawei, Peng said Apple will maintain its edge in the high-end market in the forthcoming quarters until new challengers emerge.

Apple also experienced a slump in iPad sales in the fourth quarter.

It sold less than 10 million units of the tablets in the last quarter, down 20 percent year-on-year. Apple plans to sell the iPad Pro, a larger screen next-generation tablet, by next month.

The dwindling demand for iPads is also hurting Apple's supply chain.

Some component suppliers of iPad devices are downsizing or shutting down production.

Taiwan-based Coretronic Corp, a panel display maker of Apple, is halting production at a factory in the eastern city of Nanjing, according to reports.



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