On March 20th, Apple CEO Tim Cook appeared in Shanghai. This is Cook's second visit to China after a gap of five months.
According to insiders, BYD Electronics, Lansi Technology, and Changying Precision, three Apple suppliers, showcased their intelligent manufacturing technologies and components and products produced for Apple at Apple's China headquarters in Shanghai today, with the chairmen of all three companies present on site. Among them, Changying Precision showcased the metal frame and other components supplied by the company for the Apple Head Display Vision Pro; And LanSi Technology showcased the protective panels provided for Vision Pro.
Today, Cook said in a media interview in Shanghai, "For Apple's supply chain, I don't think there is anything more important than China. Over the past 30 years, we have been continuously expanding our supply chain in China and increasing investment. The modernization level of our factories is very high now. However, if we look back at it 10 years later, we may not feel that today's modernization level is very high because we will continue to improve."
Public information shows that in 1996, Cook made his first visit to China. After serving as Apple CEO, Cook also visited China multiple times. Behind his intensive visits to China, the importance of the Chinese market was highlighted. However, Huawei's return may pose a challenge to Apple's leadership in the domestic market.
Cook Rekindles China Travel and Pays Attention to Supply Chain
Since March 2023, Cook has visited China frequently, and this visit may be related to the upcoming opening of Apple's Jing'an retail store in Shanghai.
It is reported that Apple's Jing'an retail store will open tomorrow. The store is the second largest in the world and the largest in Asia, second only to the global Apple flagship store on Fifth Avenue in New York. It is also Apple's eighth retail store opened in Shanghai.
According to Apple, the Jing'an retail store is located near Jing'an Temple and Jing'an Park in Shanghai, with a square surrounding the new store and up to 150 employees. Currently, Apple has been entering the Chinese market for over 30 years. Since the opening of China's first Apple retail store, Sanlitun, in 2008, Apple currently has 57 retail stores in China.
Last March marked the beginning of Cook's 2023 China tour. He said in the CDF Talk (China Development Forum Innovation Speech) segment, "We have a huge supplier system in China and our own flagship stores. Seeing Apple's development in China over the past 30 years, we are very pleased and honored to cooperate with China to serve our customers and consumers. We have grown together with China, and this is a symbolic and friendly relationship."
Last October, Cook embarked on his second trip to China that year. At that time, he announced his visit to Chengdu on his personal Weibo account and attached a photo of the Anshun Bridge taken by the iPhone 15 Pro Max. On October 17th, Apple announced that it will donate 25 million yuan to the China Rural Development Foundation to further increase its support for helping farmers, empowering students, and revitalizing communities in China. On October 18th, Cook appeared at the "Fruit Chain" leader Lixun Precision's factory in Jiashan, Zhejiang, which mainly produces the carbon neutral Apple Watch series.
Today, Cook also mentioned the supply chain in a media interview, which indirectly highlights the importance of China's supply chain. As is well known, as the world's largest production base of Apple, China assembles and produces over 90% of the world's iPhone products. Although Apple plans to transfer 25% of its production to India by 2025, the yield rate of its Indian factories remains a concern so far.
Difficulties in the Chinese market
In addition to relying on the Chinese supply chain, Apple also attaches great importance to the huge consumer market in China. However, since Huawei returned to the "5G" speed in the second half of last year, the iPhone is facing challenges in China.
On March 5th, data released by market research firm Counterpoint Research showed that in the first six weeks of this year, Apple's iPhone sales in China decreased by 24% year-on-year, ranking fourth among Chinese smartphone suppliers. The market share decreased from 19% in 2023 to 15.7%. Counterpoint data also shows that in the first six weeks of this year, Vivo, which has more models and a wider layout in the lower tier market, replaced Apple's top selling position.
On the contrary, Huawei's sales increased by 64% in the first six weeks, and its market share increased from 9.4% to 16.5%, surpassing Apple.
At the same time, Guo Minggui, an analyst at Tianfeng International, recently posted on social media that Samsung has increased its Galaxy S24 series shipments by 5% to 10% this year, thanks to its generative AI feature. At the same time, Apple has lowered its forecast for iPhone 15 shipments in the first half of the year. He also stated that the shipment volume of the iPhone 15 series and the new iPhone 16 series is expected to decline by 10-15% year-on-year in the first and second half of this year, respectively.
Earlier in November 2023, Guo Minggui also revealed that due to the upgrade of camera specifications and the adoption of self-developed Kirin chips, Huawei's P70 series shipments will see significant growth in 2024 (4-5 million P60 series units in 2023). If the strong demand for replenishment of mobile phone inventory can continue into the first half of 2024, the P70 series shipment volume can grow strongly year-on-year by about 23% to 13-15 million units in 2024. Even if inventory demand slows down in the first half of this year, P70 series shipments are expected to significantly increase by 150% year-on-year to 10-12 million units. As usual, Huawei will release its P-series products with a focus on imaging in the first half of each year.
Apple's performance report also reveals its decline in the Chinese market. On February 2nd, Apple released its financial report for the first quarter of fiscal year 2024 (the fourth quarter of 2023), with a revenue of $119.6 billion, a year-on-year increase of 2%; The net profit was $33.916 billion, an increase of 13% compared to $29.998 billion in the same period last year.
Performance has rebounded, but the Greater China region has experienced a unique decline - sales from the region were $20.819 billion, a 13% year-on-year decline. In fact, except for Greater China, Apple has seen year-on-year growth in other regional markets.
In order to increase market share and product sales, Apple personally participated in the "Double 11" promotion in China for the first time in 2023. Just over a month after the release of the iPhone 15 series, Apple's official channels began to lower prices, even more than in 2022.
Regarding Apple's performance in China, Ivan Lam, senior analyst at Counterpoint Research, once commented to reporters that "the market is recovering, but Apple is facing a revival from Huawei in the high-end market and competition from multiple Chinese OEMs on the iPhone 13 and iPhone 14.".