Apple's iPhone sales in China collapsed last quarter, and it's because they cost too much

Tim Cook ChinaTim CookAP

  • iPhone shipments in China dropped nearly 20% on an annual basis during the 4th quarter of 2018, according to a new estimate.
  • Huawei shipments were up 23% during the same period, according to the report.
  • Apple's high iPhone prices hurt it in China, according to IDC, a market research firm.
  • Apple missed its own revenue target during the quarter by about $7 billion, and attributed the miss to slow demand in China.

Apple's iPhone shipments during the quarter ending December 2018 were down nearly 20% in China, according to a new IDC estimate, providing additional context around why Apple missed its own revenue target by $7 billion during its most important quarter.

It wasn't just Apple that got whacked, though, as China's entire smartphone market shrunk nearly 10% in the quarter, lending credence to Apple officials saying that the drop was related to overall conditions in China. Still, Apple underperformed the market.

Apple stopped providing iPhone shipment totals to analysts and investors last quarter. That means IDC's estimates are now one of the best data points available on how well Apple's various phones are selling on a unit basis. Apple still provides total revenue by region, though, and its "Greater China" sales - including Taiwan and Hong Kong - were down 27% annually to $13 million, according to CNBC.

Huawei saw large gains during the quarter too, just as Apple was faltering. Its shipments were up 23.3% during the quarter. Other Chinese manufacturers like Oppo and Vivo saw single-digit annual gains.

IDC said in the Chinese-language release that Apple's increasing prices hurt its competitiveness in China (read a Google Translation of the release here). Apple's current-model iPhones start at $749 for an iPhone XR and go up to $1449 for the highest-end iPhone XR Max.

Apple CEO Tim Cook said when Apple announced its revenue miss in January that nearly all of the revenue miss can be attributed to China. Chinese consumer demand is currently being battered by a sluggish economy as well as the U.S.-China trade war, which is imposing tariffs on many goods being imported into the United States.

Apple stock was mostly flat in trading on Monday.

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