China iPhone sales strong, Apple tells investors as Huawei threat … – Reuters

A woman looks at a new iPhone 15 Pro and a Huawei Mate 60 Pro as Apple's new iPhone 15 officially goes on sale across China, at an Apple store in Shanghai, China September 22, 2023. REUTERS/Aly Song/File Photo Acquire Licensing Rights
Nov 2 (Reuters) – Apple (AAPL.O) said on Thursday that demand for its iPhones in China was strong, trying to reassure investors who are worried it is losing ground to a newly resurgent Huawei Technologies (HWT.UL) and other local smartphone makers.
"In mainland China, we set a quarterly record for the September quarter for iPhone," Chief Executive Tim Cook told Reuters in an interview. "We had four out of the top five best-selling smartphones in urban China."
Apple appeared to have gained market share in China in the July-September period, even if the overall smartphone market may have contracted, he said on a conference call with analysts.
The company expects to sell more iPhones in the holiday quarter despite this year's quarter having one fewer week of sales than the prior year's, Cook said.
Research firm Canalys estimated that overall smartphone sales in China fell 3% in July-September from a year earlier as consumers bought fewer smartphones as an economic recovery was choppy.
That was slower pace of decline than previous quarters, a sign that a slump in the market had eased. Sales of iPhones in China fell 6%, Canalys said.
On the other hand, analysts estimate that Huawei's China smartphone sales grew strongly in the quarter. Its Mate 60 Pro phone has grabbed headlines for using an advanced China-made chip despite being squeezed for years by debilitating U.S. sanctions.
Apple said on Thursday that its overall sales in China dipped 2.5% but it blamed tough Mac computer and iPad sales for that. Cook said sales there grew after accounting for foreign-exchange rates.
Apple's sales in China have fallen in three of the four quarters in its 2023 fiscal year, which ended Sept. 30.
Analysts said they remained optimistic about Apple's demand outlook in China through the fourth quarter as there were signs that a rebound in the broader smartphone market was gathering pace.
Aggressive discounting on the iPhone 15 series in the run up to the annual Singles Day shopping festival by major Chinese online retailers is also encouraging demand.
Although Apple occasionally allows partner vendors in China to offer discounts to spur demand, these retailers have also been locked in a "value for money" battle to win customers.
Over the past two weeks, platforms including (9618.HK), Pinduoduo (PDD.O), and Alibaba's (9988.HK) Taobao have offered major deals on iPhone 15 models, marking down prices by up to 1,501 yuan ($205.14) below retail.
"While the latest iPhone series had underperformed in China in the launch quarter due to a shorter pre-holiday shopping period coupled with supply mismatches on the Pro Max, it could see improvement in the year-ending quarter with a strong 11.11 sales event performance," research consultancy Counterpoint wrote in a note on Friday.
Apple's comments followed optimistic commentary from its chip supplier Qualcomm (QCOM.O) on Wednesday, which signaled that a two-year-long slump in the smartphone market was easing, led by a recovery in China.
Qorvo (QRVO.O), another wireless connectivity chip supplier to Apple, also said inventory levels at their China customers were slowly falling and that the company had recorded its largest bookings quarter in more than two years.
Qualcomm is also facing new competition from Huawei's chips, but said on Wednesday it does not expect Huawei's re-entry into the market to affect its relationship with Chinese smartphone companies.
Reporting by Yuvraj Malik in Bengaluru, Stephen Nellis in San Francisco and Yelin Mo in Beijing, additional reporting by Arsheeya Bajwa and Harshita Varghese in Bengaluru; Writing by Sayantani Ghosh; Editing by Gerry Doyle
Our Standards: The Thomson Reuters Trust Principles.
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