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Apple is losing ground to domestic smartphone makers in the Chinese market
US technology giant Apple has lowered its revenue forecast for the first quarter of 2019, blaming challenging conditions in the Chinese market for the downward revision.
Apple reduced its forecasted revenue for Q1 2019 to $84 billion, down from the previous projection of $89-93 billion. In a letter to his company’s shareholder’s, Apple’s CEO, Tim Cook, said that the situation in China was by far the biggest decision in Apple’s decision to downgrade its financial projections.
"Most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad," he said.
Cook stated that Apple’s poor performance in China was a natural consequence of the country’s slowing economic growth, and its failure to "foresee the magnitude of the economic deceleration… in Greater China". However, he also acknowledged that the situation had been exacerbated by "rising trade tensions with the US".
Under the presidency of Donald Trump, US-Sino relations have deteriorated to their worst levels in a generation. Within the last twelve months, the US has pushed Chinese kit manufacturer ZTE to the brink of bankruptcy, while simultaneously orchestrating a campaign to whip up international concern about the security of Huawei’s 5G network infrastructure – allegations which have yet to be backed up with any proof.
For its part, China took the opportunity to retaliate last month, when a Chinese court ruled in favour of Qualcomm in an intellectual property dispute with Apple – ostensibly banning the sale of all iPhones, from the iPhone 6 to the Iphone X, in mainland China.
A report in the Wall Street Journal states that Apple’s woes in China are being compounded by the increasing proficiency of domestic smartphone producers, most notably Huawei and Xiaomi. While Apple’s market share has remained at 8 per cent over the last 12 months, Chinese players have dramatically increased their market share in their home market. Huawei saw its market share rise from 19 per cent in 2017 to 25 per cent in 2018, while Xiaomi saw growth from 11 per cent to 14 per cent over the same period.
While Tim Cook told his shareholders that Apple had a "bright future" in China, it may well be that those times don’t arrive until the current trade tensions have deescalated.
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