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New York (CNN Business organization)Apple blew through its December quarter record for sales in China when it reported earnings last month.

Sales in the greater China region grew a whopping 57% from the aforementioned period in the previous year, topping more $21 billion, cheers to stiff demand for the iPhone 12. The results marked a big win in a key marketplace for Apple (AAPL) — China sales made up nearly 20% of the visitor'due south total acquirement in the quarter.

But the iPhone maker hasn't always been able to count on such a strong performance in the market.

In mid-2018, analysts slashed iPhone sales projections, citing weakness in People's republic of china equally one of several reasons for the slowdown. In January 2019, Apple tree warned investors to expect lower sales during the Dec quarter due primarily to "lower than anticipated" sales in China considering of the trade war with the Us. Then Covid-19 outbreak began in People's republic of china in early 2020, and it became the beginning place where Apple tree had to learn how to manage despite shuttered stores and factory closures.

Yet analysts are optimistic that Apple'southward success in Red china in the most recent quarter was not an anomaly.

"Red china was kind of like a thorn in Apple'south side," said Dan Morgan, senior portfolio director at Synovus Trust Company. "Now, the pendulum has completely swung to the other side."

A key marketplace

Though sales in China haven't always been steady in recent years, the market remains a crucial one for Apple.

The state's large middle form has big spending power. Mobile applications for services such as shopping and banking are especially popular with Chinese consumers, creating the potential for Apple to earn more than incremental revenue from its App Store and software services. And there'due south still room for growth — Apple'due south global 2020 smartphone marketplace share was 14.8%, simply information technology was simply 10.1% in Prc, co-ordinate to data from Gartner.

Communist china is expected to account for roughly 20% of total iPhone upgrades in the coming yr, Wedbush analyst Dan Ives said in a note to investors last week. China remains "a key ingredient" to Apple's success, he added.

Apple CEO Tim Cook recently granted a rare interview to Chinese higher educatee and tech influencer He Shijie, a move probable to drum up even more support among young Chinese consumers. Melt said there are "a ton" of Apple product features that were inspired by Chinese consumers, including the QR code scanner and dark mode for the iPhone.

"Nosotros listen very advisedly to our customers at that place and wind upward creating things based on that that are then given to the world," Melt said. "We get a lot of feedback from Prc."

'A tape number of upgraders'

The iPhone 12 was a major contributor to Apple tree's China sales growth in its terminal quarter, though Cook said during the earnings call that other products, including the iPad and wearables, also contributed.

Analysts say many consumers in multiple markets held off on buying the terminal few iPhone models, because smartphone lifecycles have gotten longer, and in that location weren't enough novel features to make consumers shell out for a new device. By the time the iPhone 12 with 5G launched in October, consumers were overdue for an upgrade.

There are several reasons the iPhone 12 was poised to be especially popular in China, where Cook said there were "a record number of upgraders" during the holiday season. One reason is that Red china'south 5G networks are more robust than in many other markets, giving consumers there greater incentive to upgrade. In the United States, by contrast, people might have to expect until 5G is more than widely available.

"(There has been) a very ambitious build out of 5G in Mainland china; in the United states of america, nosotros're getting there merely we haven't been as committed," Synovus' Morgan said.

China's economy as well recovered faster from the pandemic-related downturn than other countries — it'south currently about two quarters ahead of Western Europe and Northward America, said Gartner annotator Annette Zimmermann — and so its consumers may take more cash to spend on new devices. Apple tree sold 8% more smartphone units in China in 2020 than the year before, co-ordinate to Gartner, and that number only includes about two months of iPhone 12 sales.

"We will yet see very positive growth over the next two quarters," Zimmermann said. "At that place are a good number of people who still demand to upgrade to the adjacent generation and (who volition be) driven by 5G."

Apple may also be benefitting from Chinese competitor Huawei's struggles. Recent US policies accept cut off Huawei's access to top-tier American tech, leaving information technology unable to utilise software from Google (GOOGL), for example, in its smartphones, making them less appealing to some consumers.

Apple's share of the smartphone marketplace in China ticked up nigh v percentage points during the December quarter, while Huawei's dropped past more than x, co-ordinate to data from IDC.

Whether Apple's strong growth in Red china continues will probable depend in part on analysts' predictions of an iPhone 12 upgrade "supercycle" coming true — and many still remember it will.

"I'm bullish that these Dec China numbers aren't just a quick aberration," Synovus' Morgan said. "I'm optimistic that we are, in fact, going to become that cycle and that this quarter was evidence that is beginning."

Source: https://www.cnn.com/2021/02/28/tech/apple-china-sales-iphone-12/index.html

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