Dropping iPhone Demand in China Shows Growing Buyer Concerns

Dropping iPhone Demand in China Shows Growing Buyer Concerns

Dropping iPhone Demand in China Shows Growing Buyer Concerns

CEO Tim Cook blamed the slump on a slowing economy in China, where Apple has also faced competition from Huawei and Xiaomi.

Stocks tumbled today on Wall Street, with technology companies suffering their worst loss in seven years, after Apple reported that iPhone sales are slipping in China.

The move confirmed investors' biggest fear - a slowing global economy further hindered by the U.S.

After Asian markets tumbled overnight and European exchanges stumbled, US futures were trading lower on Thursday morning, dragged down by Apple's stunning announcement Wednesday.

The company said it now sees fiscal first-quarter revenue of $84 billion, below the $89 billion to $93 billion that it had previously expected.

Cook said that lower than anticipated iPhone sales, primarily in Greater China, accounted for all of the company's revenue shortfall compared to previous guidance. Miner Teck Resources Ltd. B shares lost more than six per cent on copper dipping below the $2.60 threshold on concerns about China.

The U.S. -China trade dispute threatens to snarl multinational companies' supply lines and reduce demand for their products.

Apple's rare admission on Wednesday cited steeper-than-expected "economic deceleration" in China and emerging markets and noted that trade frictions between Washington and Beijing were taking a toll on its smartphone sales.

"They're gonna be fine", Trump said at a Friday news conference at the White House.

Apple shares fell 10% in New York Thursday, the biggest drop in nearly six years, after the warning.

The precipitous decline in Apple shares was accompanied by plunges for companies that produce parts for Apple devices. Apple has been steadily raising the price of its newest and most powerful iPhones each year, with some models now topping $1,000. It also led to big drops overall in the US stock market, as well as other financial markets around the world.

Although Apple's current share price appears to bake in a lot of the negative news around its core iPhone franchise, it's still not a risk-free investment - no stock is.

Peter Richardson, a research director at Hong Kong-based Counterpoint Research, said it was hard to see a catalyst that will help Apple recover lost ground in China.

Zino added that the high prices of the iPhone XS and XS Max - which start at $999 and top out at $1,449 - are hurting the phones in China, where consumers have cheaper options from companies like Huawei. While macroeconomic challenges in some markets were a key contributor to this trend, we believe there are other factors broadly impacting our iPhone performance, including consumers adapting to a world with fewer carrier subsidies, United States dollar strength-related price increases, and some customers taking advantage of significantly reduced pricing for iPhone battery replacements. The Trump administration responded by Apple products from the tariffs. And revenue from consumption tax was down 72 percent in November from a year ago, Balding said.

Related news