Apple’s chief financial officer, Luca Maestri, addressed concerns about a decline in China revenue by highlighting the growth in sales in other emerging markets such as India, Saudi Arabia, Mexico, Turkey, Brazil, and Indonesia. However, while Maestri emphasized the potential of these markets, data suggests that Apple’s growth in these regions is not as strong as he portrayed it to be.
According to Apple’s Q2 2024 report, sales in the Americas, which include countries like Brazil and Mexico, slightly decreased compared to the previous year. Additionally, sales in the “rest of Asia Pacific,” including emerging markets like India and Vietnam, declined by 17%. These figures indicate that Apple’s performance in these regions is not as robust as Maestri suggested.
One possible factor contributing to Apple’s declining sales in emerging markets is pricing. Maestri acknowledged that affordability is a significant issue in these regions and mentioned that Apple has introduced financing solutions and trade-in programs to address this. However, it remains to be seen if these efforts will have a significant impact on sales.
Furthermore, Apple faces fierce competition in the Chinese market, which is its third-largest market overall. Domestic companies like Oppo and Xiaomi dominate the market, and Huawei has experienced a resurgence despite previous challenges due to U.S. sanctions. Counterpoint Research reported that Huawei’s phone sales increased by almost 70% while Apple’s fell by 19%. Moreover, the Chinese government banned iPhones for government officials in 2023, mirroring similar actions taken by the U.S. against Huawei.
In addition to challenges in China and emerging markets, Apple also reported a 10% drop in iPhone sales globally. One potential reason for this decline could be Apple’s slower adoption of artificial intelligence (AI) compared to competitors like Google and Microsoft.
Despite these setbacks, Apple managed to exceed Wall Street expectations and saw a stock hike of over 10% in after-hours trading. This positive response was driven by increased services revenue and a significant $110 billion stock buyback, surpassing last year’s $90 billion purchase.
Investors on the earnings call expressed interest in Apple’s upcoming generative AI launches, but Maestri and CEO Tim Cook only revealed that announcements were forthcoming. More information is expected to be unveiled at Apple’s Worldwide Developer Conference.
In conclusion, while Apple aims to offset its declining sales in China with growth in emerging markets, the data suggests that the company’s performance in these regions is not as promising as portrayed. Apple faces challenges in pricing, competition, and slower adoption of AI technology. However, despite these obstacles, Apple’s stock performance and focus on services revenue provide some optimism for the company’s future.
