Apple Inc. (NASDAQ: AAPL) CEO Tim Cook repeatedly has said China is critical to the company’s success. It is the largest smartphone market in the world. New research shows Apple is in deep trouble in the number one nation in the world by population. It is unlikely it can make up for the trouble elsewhere.
Research firm Canalys reported that overall China market sales dropped a sickening 21% in the first quarter compared to the same one last year. Apple’s unit sales did not put it among the top four vendors, all of which are locally based.
In a new piece of research, Canalys experts wrote:
Smartphone shipments in China suffered their biggest ever decline in Q1 2018, down by more than 21% annually to 91 million units, a number first passed some four years ago in Q4 2013.
In comments about the market leader and the other top vendors, its experts added:
Huawei (including Honor) managed to grow shipments by a modest 2%, maintaining its lead and consolidating its market share to about 24% by shipping over 21 million smartphones. Second-placed Oppo and third-placed Vivo bore the brunt of the overall decline, with shipments falling by about 10% to 18 million and 15 million respectively. Xiaomi was the only company to buck the trend, growing shipments by 37% to 12 million units, and overtaking Apple to take fourth place.
These top four companies held 73% of the market, based on shipments during the period.
In Apple’s most recently reported quarter, which ended December 30, overall revenue rose 13% to $88.3 billion. Greater China revenue rose 11% to $18 billion. Even Apple’s revenue in Europe is larger and growing more quickly. In the quarter, it hit $21.1 billion, up 14%.
The China data from Canalys confirms recent investor concerns. Financial results from some of its vendors have been poor. Some experts who follow and predict Apple sales claim the new iPhone X, the most expensive model, has produced poor results for Apple. Apple’s share price has fallen 5% this year to $164, underperforming the market. This is quite a contrast to the 70% improvement over the past two years.
The skepticism about Apple’s near-term future has grown rapidly over the past several weeks. The research about China’s market only confirms it.