Apple's Record Revenue Tarnished by China iPhone Slump

Apple reported record revenues for the October-December period, reaching $124.3 billion, according to Nikkei Asia. However, iPhone sales experienced a 0.8% dip, with China emerging as the sole region experiencing revenue decline.

The company's overall revenue growth was driven by strong performance in all other regions, particularly Europe and Japan, following the September launch of the iPhone 16, Apple's first AI-powered smartphone.

Despite the record revenue, Apple's stock price saw a dip during after-hours trading on Thursday.

The December quarter, typically Apple's strongest due to holiday season sales, saw Greater China – encompassing mainland China, Hong Kong, and Taiwan – negatively impact iPhone sales. The region experienced an 11.1% year-on-year revenue decline to $18.5 billion.

Apple attributes this decline to intense competition from Huawei Technologies and other domestic brands in China, coupled with the ongoing unavailability of its highly anticipated Apple Intelligence AI feature.

"We did see better results in the markets that we had rolled out [Apple Intelligence] in than the markets we hadn't," Apple CEO Tim Cook stated during an earnings call, highlighting China's status as "the most competitive market in the world."

Apple Intelligence, initially released in late October, is currently accessible to users in most regions when the device and Siri's language are set to US English, but remains unavailable in mainland China. Cook announced that the AI feature will expand to additional languages, including simplified Chinese, in April.

The Apple China website downplays AI features on iPhone 16 pages, citing regulatory approval as the factor delaying the launch. Meanwhile, Apple is banking on China's recent consumer spending stimulus to boost sales.

"We do see fiscal stimulus occurring, and we'll be glad to talk about what that looks like on the next call," Cook added.

Apple's challenges extend beyond China. Despite a deal to establish a local production facility in Indonesia, the company remains barred from selling the iPhone 16 there due to its failure to comply with domestic content regulations.