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Are iPhone sales growing or shrinking in China? That depends on which data points you look at, says an analyst.

Shubhangi Goel   

Are iPhone sales growing or shrinking in China? That depends on which data points you look at, says an analyst.
  • Tim Cook said iPhone sales grew in China, despite external research showing a decline.
  • The discrepancy may be due to different methods of calculating revenue used by Apple and analysts.

Apple told investors on Friday that iPhone sales grew in China in the first three months of the year, a surprise to analysts who had dissected industry reports in recent months that appeared to show the opposite.

The difference may stem from how Apple and external analysts calculate revenue.

"We still saw growth on iPhone in some markets, including mainland China," CEO Tim Cook said on Apple's Friday earnings call.

The company's revenue for greater China, which includes Hong Kong and Taiwan, declined 8% in the quarter year-over-year, to $16.4 billion.

Cook, citing data company Kantar, said the two best-selling smartphones in urban China during the quarter were the iPhone 15 and iPhone 15 Pro Max.

However, over the last quarter, independent analysts have reported a slump in overall iPhone sales in China. For the quarter that ended on March 31, Counterpoint Research reported a 19% year-on-year decline in iPhone sales in China, and the International Data Corporation found that iPhone shipments fell nearly 10% for the region during the same period.

iPhone sales in China are a closely watched metric because greater China accounted for 18% of Apple's sales across products in the first quarter, according to the earnings results. Across regions, sales of the smartphone made up over half of the tech giant's net sales, dwarfing contributions from the Mac, iPad, and wearables.

Cook's limited remarks on China's iPhone sales raised questions on Friday's call from analysts who compared Apple's data with independent reports.

"The simple question is, when we look at the data points that have been repeatedly reported throughout the course of this quarter, I'm curious, Tim, you know, what are we missing?" asked Wells Fargo analyst Aaron Rakers.

Cook declined to comment on third-party data points on the call.

Analysts at the research firms said the difference comes from how analysts and Apple calculate revenue.

In the first quarter, "we tracked a year-on-year decline in total value generated by iPhones in China," IDC analyst Will Wong told Bloomberg after Apple's results.

The average selling price plays a key role in explaining the difference. IDC counted the prices customers paid, while Apple likely uses another price level, such as factory price, in its financial reporting, Wong said.

The discrepancy may also come from newer and more expensive models making up a bigger portion of purchases, which could drive up revenue, even if total unit sales declined.

Cook, who visited China in March, remained optimistic about the region, a key center for Apple's manufacturing, in addition to its sizable customer base.

"I maintain a great view of China in the long-term. I don't know how each and every quarter goes and each and every week," Cook said on Friday's call. "But over the long haul, I have a very positive viewpoint."