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What Is the Silver Lining for Apple in the Greater China Region?

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Apple’ revenue in the Greater China region falls again

Apple’s (AAPL) Greater China revenue has fallen further. In fiscal 3Q17, the iPhone maker posted revenue of just $8.0 billion in the Greater China region. In fiscal 2Q15, the company posted revenue of $16.8 billion in the region. Apple’s revenue from the region fell more than 10.0% YoY (year-over-year) in fiscal 3Q17 and 25.0% from fiscal 2Q17. Apple’s third quarter is usually its worst.

The company has been facing headwinds from the region, including stiff competition from less expensive Chinese handset makers such as Huawei, OPPO Electronics, and Vivo Communication Technology. The company has been pressured by Chinese authorities to comply with strict new security rules.

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Chinese consumers prefer expensive phones

However, there is a silver lining in the region for the company. According to The Wall Street Journal, wealthy Chinese customers are prepared to pay higher prices for new technology. While the smartphone market is flat, the demand for smartphones that cost 4,000 Chinese yuan ($595) or more is increasing.

According to research company Canalys, Apple is expected to ship 27 million iPhones, iPads, and iPods in the region in the last four months of 2017, compared with 22 million in the last four months of 2016.

The Cupertino-based company’s performance in the region in the next couple quarters will be critical. If the iPhone 8 does not excite the country, Apple’s revenue could take a hit, as the region accounts for 17.8% of the company’s total revenue.

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