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A Clearer Picture of Apple’s China Business Emerges
The most recent data coming out of China gives us a better picture of what is going on in Apple's China business. iPhone sales in Mainland China were likely down 5% y/y in Mar-24, better than Apple's reported 8% decline in Greater China. When Cook said iPhone grew in China in Mar-24, he was likely talking about units, not revenue. In other words, this means China's non-iPhone segment was down 12%, notably lower than the global average of Apple's non-iPhone revenue which was up 4% y/y.

Key Takeaways

iPhone sales in Mainland China were likely down 5% y/y in Mar-24, better than Apple's reported 8% decline in Greater China.
The non-iPhone sales in China are doing much worse than the global numbers due to China macro conditions.

China iPhone sales

The dynamic around Mainland China iPhone sales in the Mar-24 quarter is becoming clearer.

The China Academy of Information and Communications Technology (CAICT, a government entity) reported Mainland iPhone units in the month of March were up 12% y/y. This reveals iPhone sales in China spiked in the back half of the quarter driven by iPhone price cuts in January, along with resellers further discounting in late February.

To better understand the full picture, let’s go back to last week’s conference call when Cook mentioned, “iPhone within Mainland China grew on a reported basis.” While he did not specify if it was revenue or unit growth, I now believe he was referring to units.

If units in were up 1% y/y and there was an average price cut of 5%, that would trigger a sequential improvement in iPhone sales. This nets out to my belief that iPhone revenue in Mainland China was down 5% y/y last quarter.

This lines up with Cook’s comments that, “the primary driver of the acceleration was iPhone.” The “acceleration” that Cook is referring to is Greater China revenue was down 8% y/y in Mar-24 versus down 13% in Dec-23.


China non-iPhone sales

With Apple’s iPhone business in Mainland China down 5%, the non-iPhone business in Mainland China (Services, Mac, iPad, and Wearables) must have been down about 12% y/y in Mar-24. As a point of reference, Apple reported these segments were up 4% y/y in Mar-24 on a global basis.

In other words, China’s non-iPhone business was down significantly compared to both iPhone in China and the comparable global segment.

My best guess for this delta is the non-iPhone business continued to be soft in March quarter because of the China macro factors that have softened consumer “disposable” spending. The iPhone was able to hold its ground given phones fall under a consumer’s “necessary” spending.


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