Apple reported dipping sales in China. (Image: Getty )
Tech giant Apple could be hit hard if after the firm revealed a shock drop in iPhone sales in the Chinese market.
Apple reported its total registered £14.3 billion for the last financial year, an 11% decrease from the previous year.
Problems facing the phone maker include more competition in a country where homegrown manufacturers are starting to take a larger share of sales.
Apple’s iPhone year-over-year shipments in China declined nearly 10% in the most recent quarter. In comparison, native companies Huawei and Xiaomi posted year-over-year increases of more than 20%, according to the research firm International Data Corp.
In Washington, President has been mulling over a series of increases to international trade tariffs, including a mooted 10% import levy on goods from China.
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Donald Trump is mulling over hitting China with trade tariffs. (Image: Getty )
Although Apple is based in California, a huge proportion of its manufacturing base is in China, meaning the firm could be hit hard by any rise in a US import tax. Beijing also flies in the face of Apple as it attempts to move factories to India and Vietnam.
The iPhone’s revenue drop wasn’t entirely unexpected, given that the first software update enabling the device’s AI features didn’t arrive until just before Halloween, and the technology still isn’t available in many markets outside the US.
The countries still awaiting Apple’s AI suite include China, a key market where the company lost ground.
Although he didn’t mention China, Apple CEO Tim Cook told investors on a conference call that a software upgrade enabling the AI features in more European markets and Japan and Korea will be rolling out in April.
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Many customers in China are choosing alternative brands to Apple. (Image: Getty )
Anticipation that an AI-infused iPhone would encourage consumers to ditch their current devices and splurge on an upgrade is the main reason Apple’s stock price surged by 30% last year.
However, the sinking realisation that an uptick in demand may take longer than expected has caused Apple’s shares to backtrack by 5% during the first month of the new year.
The stock initially slipped slightly in extended trading after the numbers came out but later reversed course and rose by more than 3% after Mr Cook said Apple is seeing a record number of people upgrading their iPhones.
During a conference call, he said: “I could not feel more optimistic about our product pipeline. So I think there’s a lot of innovation left on the smartphone.”