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Apple Warns of Sluggish Holiday Quarter in China

Apple, which has already faced the problem of slowing down the growth of its business in China, warned that by the end of the fourth quarter of this year, the revenue of the company will be approximately the same as from the same period in 2022.

Apple Warns of Sluggish Holiday Quarter in China

This American technology giant explains its forecast of financial performance for the period from October to December 2023 by the fact that investors do not record signs of positive sales dynamic, which they expected.

At the same time, the company expects that revenue generated as a result of sales of smartphones of the iPhone line will increase by the end of the current quarter. This was announced by the financial director of the company Luca Maestri.

Currently, the tech giant is making efforts to overcome the recession, which turned out to be the longest in recent decades. In the period from July to September, the company’s revenue indicator showed a negative downward trend. This trend has been recorded for the fourth time in a row. The company found itself in a similar situation in 2001 when it was forced to overcome difficulties caused by weak demand in the computer market and unstable consumer activity in China.

In the period from July to September of this year, the tech giant’s revenue amounted to $89.5 billion. This indicator is 1% lower than the result of a year ago. At the same time, revenue for the last quarter exceeded Wall Street expectations which was at $89.4 billion.

According to experts, this indicator is evidence that the slowdown in growth in the Chinese market has become a sensitive influence factor for the technology giant. The current situation for the company in the Asian country arose primarily against the background of Beijing’s ban on the use of Apple devices in some workplaces. Also, the difficult state of affairs is the result of increased competition in the Chinese market after the debut of the new flagship smartphone of the local manufacturer Huawei Technologies Co.

The tech giant’s revenue in China in the third quarter of 2023 amounted to $15.1 billion. A year earlier, this figure was equal to $ 15.4 billion. At the same time, this result turned out to be significantly lower than the forecasts of some analysts who expected Apple’s revenue in the Chinese market in the period from July to September of this year to be equal to $ 17 billion. Tim Cook, the company’s chief executive officer, said that in this case, currency fluctuations and a decrease in sales of Macs and iPads were factors of influence.

Last quarter, the company updated the iPhone. The tech giant’s smartphone sales have exceeded expectations. The total cost of devices in this category, produced by Apple and sold in the period from July to September amounted to $43.8 billion. A year earlier, this figure was equal to $ 42.6 billion. Also noteworthy is that smartphone sales have reached record quarterly revenue in mainland China. This result was recorded against the background of problems with the growth of the Asian country’s economy and the aforementioned ban by Beijing.

Tim Cook, during a conference call with analysts, said that the investment volumes of the technology giant in artificial intelligence are insignificant. The media reported on the company’s intention to introduce AI technologies into several new apps and services next year. Tim Cook confirmed this information, telling analysts that improved products based on artificial intelligence will be presented over time.

Commenting on the situation of the company in China, Mr. Cook said that, in his opinion, Apple has managed to increase its share in the local smartphone market. Also, the tech giant’s report on the results of operations for the third quarter of 2023 contains information about a record increase in revenue in several developed and emerging markets, including India.

Apple’s profit from Mac sales from July to September amounted to $7.61 billion. A year earlier, this figure was equal to $11.5 billion.

Sales of Wearables, Home, and Accessories totaled $9.3 billion last quarter. Over the same period of 2022, this figure was fixed at the level of $9.6 billion.

Services in the third quarter of 2023 brought the company revenue of $22.3 billion. A year earlier, this figure was equal to $19.1 billion.

iPad sales totaled $6.4 billion between July and September. According to the results of the third quarter of 2022, this figure was fixed at $7.1 billion.

As we have reported earlier, Apple Faces Potential Watch Import Ban.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.