Apple's Reports a Sharp Decline in Quarterly China Revenue Driven By 5G iPhone Launch Delay

October 30, 2020 2:11 pm

Beijing (PingWest)- Apple reported its lowest revenue in China since 2014. Sales in China, which includes Hong Kong and Taiwan fell 29% year-over-year from USD11.13 billion to USD7.95 billion in the third quarter this year.

Apple attributed the slump to the delayed launch of the iPhone 12.

Covid-19 pandemic disturbed Apple’s supply chain, which eventually led to a later launch.

Apple traditionally launches new iPhone in September, but this year iPhone 12 was not available until late October.

Apple saw its revenue grew 1% to USD64.7 billion in the third quarter, driven by strong demand for Mac and iPad products benefited from working from home arrangements and remote learning.

All regions other than China saw sales increase in the quarter, China, however, drop nearly 29% year-on-year to USD7.95 billion.

"Greater China is the region that was most heavily impacted by the absence of the new iPhones during the September quarter," Apple CEO Tim Cook said during an earnings call on Thursday.

Driven by the sales decline in China during the September quarter, iPhone total sales drop 21% year-on-year to USD26.4 billion, while Apple’s other products such as Mac, iPad and service sectors reported robust growth.

Apple did not reveal specific iPhone sales numbers, but Counterpoint estimated Apple shipped 44.8 million iPhones in the September quarter, representing year-over-year decline of 7%,

In an interview with Reuters, Apple Chief Executive Tim Cook said that he was "optimistic" about the iPhone 12 cycle based on the first five days of shipping data.

"5G is a once-in-a-decade kind of opportunity. And we could not be more excited to hit the market exactly when we did," Cook said. "At least in the US, the carriers are being very aggressive.

“A larger percentage of China revenue is made up of new iPhones. And so that’s the reason the number for the total quarter started with a minus sign. But given what we see in the early going with the new iPhones, we’re confident we’ll grow in Q1,” Cook told CNBC.

China is a key battleground for Apple as some analysts estimate that the one third of all new iPhone sale will come from the country. However, the competition in China is getting intense.

Apple accounted for 8% of the smartphone market in China as the end of the third quarter, Huawei led the market with 45% followed by Vivo, Oppo and Xiaomi. According to Counterpoint research, seven of the 10 best-selling smartphones in were 5G models. Apple has a relative late start in 5G smartphone compared to the rivals.

In 2019, competitors including Huawei Technologies Co, Vivo and Xiaomi Corp. launched a number of 5G devices, which have been followed by dozens of more affordable and budget 5G handsets this year before the iPhone 12.