Apple just hit a wall in China. The company’s latest earnings report shows a steep drop in iPhone sales, raising serious questions about its future in a market that once seemed like a goldmine.
Sales slumped hard in Greater China, and that’s not just a red flag—it’s a siren. This could reshape Apple’s growth story, especially with competition heating up and local rivals clawing back market share fast.
iPhone Sales Plunge in China: The Numbers Don’t Lie
Apple’s revenue from Greater China—which includes mainland China, Hong Kong, and Taiwan—fell by 8% year-over-year last quarter. That’s a pretty big dent. And it’s not just a blip.
iPhone sales alone dropped by more than 12% in the region, according to company filings. That’s despite the iPhone 15 lineup still being relatively fresh on shelves.
Investors didn’t take it well. Apple shares slid nearly 4% in after-hours trading as soon as the numbers came out.
There’s a bigger picture here. For years, China was Apple’s second-largest market, trailing only the U.S. It helped fuel Tim Cook’s expansion playbook. But now?
Huawei’s Comeback and Local Pressure Are Squeezing Apple
One reason Apple is struggling in China? Huawei. The once-crippled tech giant is making a surprisingly strong comeback, and it’s eating into iPhone sales big time.
Huawei’s Mate 60 Pro, launched last year, has done exceptionally well. It stirred up national pride and was marketed almost like a symbol of tech independence. People noticed.
Another major issue: government restrictions. Chinese officials have reportedly discouraged public employees from using iPhones at work or bringing them into state facilities. That kind of unofficial pressure adds up.
Then there’s the pricing. While Apple still holds the premium end of the smartphone market globally, Chinese consumers now have a growing list of cheaper, competitive alternatives—many with high-end specs.
Just look at this:
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Huawei, Xiaomi, and Oppo have rolled out flagship devices priced 15-25% lower than Apple’s.
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National sentiment continues to swing toward supporting local brands.
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China’s youth market is increasingly price-sensitive due to sluggish economic growth.
All these pieces together? It’s no surprise Apple’s feeling the squeeze.
Tim Cook’s Comments Sound Cautious—Maybe Too Cautious
Apple CEO Tim Cook tried to downplay the China situation during the earnings call. He said they “remain optimistic” and “see a lot of opportunity.”
But his tone was muted. And he didn’t deny the slowdown.
Cook pointed to some “macro headwinds” and acknowledged “tough comps,” industry speak for lapping last year’s unusually strong results. But investors weren’t convinced. You could practically hear the worry between the lines.
Here’s what he did say: Apple is continuing to invest in its retail presence in China. That includes store expansions and service offerings. Whether that helps in the short term? Anyone’s guess.
Apple’s Broader Earnings Beat, But the iPhone Problem Stands Out
Outside of China, Apple actually posted better-than-expected earnings overall. Revenue was up slightly, beating Wall Street’s low expectations, and services growth was solid.
That includes iCloud, Apple Music, and the App Store. The services category grew 8% year-over-year, hitting an all-time high.
But the iPhone still accounts for nearly half of Apple’s total revenue. So any significant dip here stings—especially when it’s tied to a crucial market like China.
Here’s a snapshot of Apple’s Q3 results:
| Category | Revenue YoY Change |
|---|---|
| iPhone | -2% |
| Services | +8% |
| Wearables | -1% |
| Mac | +4% |
| iPad | -5% |
| Greater China | -8% |
So yeah, there’s some balance. But not enough to cancel out the iPhone drag in Asia.
What Comes Next? Apple’s Asia Strategy Is in the Spotlight
All eyes are now on what Apple does next in Asia. It can’t afford to lose more ground.
Analysts expect the company to lean harder into India, where Cook has recently doubled down with new stores and supply chain investment. That might help diversify a bit.
Meanwhile, Apple is betting on the upcoming iPhone 16 to spark a refresh cycle. Rumors suggest the next version will feature generative AI tools baked into iOS 18. That could move the needle—if it lands right.
But there’s no guarantee. The Chinese market is fickle, and consumer loyalty doesn’t stretch as far as it used to. Not in the face of price cuts, national pride, and tightening wallets.
