Apple appears to be reigniting iPhone demand in China, but its profit margins could pay the price.
iPhone shipments in China soared about 40% in May, dwarfing a 13% rise in overall smartphone shipments. That’s according to Bloomberg calculations based on new figures from the China Academy of Information and Communications Technology, a research group with ties to the Chinese government.
The jump follows a 50% surge in shipments of Apple’s smartphones in April, signaling a significant comeback in its biggest market outside the US.
Yet it’s worth underscoring that Apple aggressively cut iPhone prices and unleashed a raft of new promotions in the months leading up to China’s June 18 shopping festival in a move that could weigh on its margins.
iPhone shipments fell 10% globally in the first quarter as sales in China seemingly softened and local rivals such as Huawei took market share.
The improved the China outlook, and the recent news of Apple’s partnership with artificial-intelligence powerhouse OpenAI, have helped lift the company’s stock 13% this year after declines in March and April.
However, Apple Intelligence features that use ChatGPT may not be available in China when they are rolled out on the next iPhone because Beijing has not yet approved the OpenAI bot for use.
Apple’s latest earnings show it generated $16.4 billion or 18% of its roughly $91 billion of revenue last quarter in Greater China — a region that includes China, Hong Kong, Taiwan, and Macau. That was an 8% decline from the same period last year, compared to a 4% top-line decline overall.
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