Apple’s 2Q17 Revenue from China Fell 14% from Fierce Competition

Apple’s (AAPL) revenue from Greater China, which includes China (FXI), Hong Kong, and Taiwan (EWT), fell 14.0% YoY (year-over-year), from $12.5 billion in fiscal 2Q16 to $10.7 billion in fiscal 2Q17.

In fiscal 2Q17, the Americas continued to be Apple’s largest market, generating revenue of $21.2 billion. That was an 11.0% rise from fiscal 2Q16 revenue. Revenue from Europe rose 10.0% to $12.7 billion, and revenue from the Asia-Pacific region rose 20.0% to $3.8 billion. Revenue from Japan saw a rise of 5.0% to $4.5 billion.

Apple’s MacBook and Services revenue from Mainland China saw double-digit growth in the March quarter. Apple’s retail store revenue in Mainland China rose 27.0% YoY, which offset a fall in revenue in Greater China. Revenue from China fell 13.0% YoY in the first six months of fiscal 2017. More than 4.0% of the fall was attributed to foreign exchange fluctuations. In comparison, revenue fell 32.0% YoY in the last six months of fiscal 2016.

Apple’s revenue in China has been negatively impacted in the last few quarters by increasing competition from domestic smartphone manufacturers such as Huawei and Oppo. China, which accounted for more than 20.0% of Apple’s revenue in fiscal 2Q17, is Apple’s third-largest market after the Americas and Europe. Apple has faced falling sales and revenue in China since the start of last year. Sales fell 24.0% YoY in fiscal 2Q16, 33.0% YoY in fiscal 3Q16, and 30.0% YoY in fiscal 4Q16. China was previously Apple’s second-largest market.

CEO (chief executive officer) Tim Cook stated, “Our March quarter results were in line with our expectations and similar to the year-over-year performance we experienced in the December quarter. We continue to be very enthusiastic about our opportunity in China.”