Apple shares fell 4% after news of failed sales in China

Apple shares ended yesterday’s trading in the US with a 4% decline, which corresponds to the worst trading day since August 5 last year. The catalyst for this stock movement was news about the company’s failures in the Chinese smartphone market. Apple’s stock price has retreated 12% from its December peak, and since the beginning of the year it has underperformed all members of the “Magnificent Seven” technology sector in the United States.

Image Source: Apple

One of the reasons for the fall in Apple’s stock price yesterday was a report published by Canalys analysts, which stated that at the end of last year, the iPhone in China fell back to third place among other smartphones. The American manufacturer ended 2024 with 15% of the Chinese market, while sanctioned Huawei came in second place with 16% of the market, and the leader in the Chinese market was the local company Vivo with a share of 17%. By the way, according to the results of the fourth quarter, individually, all participants of the top three occupied 17% of the Chinese smartphone market, and Apple is still slightly ahead, although iPhone sales volumes at the end of the quarter fell by 25% year-on-year. Huawei, on the contrary, increased its smartphone shipments in China by 24% in the fourth quarter.

In principle, at the end of the year as a whole, the volume of supplies of Apple smartphones in China decreased by 17%. TSMC, which makes mobile processors for Apple, this week released a forecast that smartphone shipments are up 6% for the current quarter on a sequential basis. This trend is explained by TSMC representatives as seasonal factors. If historically TSMC’s revenue was largely determined by components for smartphones, then in the last quarter chips for artificial intelligence systems came to the fore.

Adding fuel to the fire, well-known analyst Ming-Chi Kuo said that in the first half of the year, iPhone shipments will decrease by 6% year-on-year, with the bulk of the decline occurring in the second quarter. Since Apple Intelligence is still not offered in China, demand for new smartphones from this brand remains extremely low. Even when these features are introduced in China, they are unlikely to significantly increase iPhone sales or Apple’s services revenue, according to the expert.