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Accused of concealing the decline in demand for iPhone in the Chinese market, Apple agrees to pay nearly $500 million

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Apple CEO Cook's unrealistic commitment to demand in the Chinese iPhone market over 5 years ago has sparked a class action lawsuit against Apple by shareholders. On March 15th, Apple submitted a preliminary settlement agreement to the Oakland District Court in California, agreeing to pay $490 million as a settlement.
According to the content of the class action lawsuit, shareholders accused Cook of "concealing the fact of declining demand for iPhones in China and deceiving shareholders.". The latest settlement agreement submitted by Apple covers investors who purchase Apple stocks within two months of Cook's comments and Apple's lowered revenue forecast.
Cook told investors in the analyst conference call on November 1, 2018 that although Apple is facing sales pressure in the weak currency markets such as Brazil, India, Russia and Türkiye, he said that "China will not be included in this category".
This promise has now cost Apple nearly $500 million. Shareholders sued Apple for lowering its quarterly revenue forecast by $9 billion on January 2, 2019, the first time since 2007, due to the tense trade situation between China and the United States. The next day, Apple's stock price fell by 10% and its market value evaporated by $74 billion. A few days later, Apple notified its suppliers to limit the production of iPhones.
As of the time of publication, Apple China has not yet provided any comments to First Financial reporters on this matter.
The settlement agreement took five years to reach. Previously, Apple insisted that the decline in sales in China was caused by changes in the exchange rate. But investors believe that Apple is well aware of the fact of declining demand, while Cook has concealed this truth.
Over the past five years, Apple's stock price has still risen more than four times, but this year, due to the continuous decline in iPhone demand, Apple's stock price has fallen by more than 10%. The company's current market value is about $2.67 trillion.
At the beginning of this year, investment banks such as Barclays Bank downgraded Apple's stock rating due to further decline in sales prospects in the Chinese market. According to the latest forecast data from research firm Counterpoint earlier this month, Apple's iPhone sales in China decreased by 24% year-on-year in the first six weeks of this year, and the company is facing intensified competition from local competitors such as Huawei. The decline in iPhone sales is also related to the overall contraction of the Chinese smartphone market.
According to Counterpoint's data, Apple's market share in the Chinese smartphone market has dropped to 15.7%, ranking fourth, while the company's market share is 19%, ranking second. In contrast, Huawei's market share in the Chinese smartphone market has jumped to second place, accounting for 16.5%.
Last month, Apple offered a rare iPhone discount of up to 500 yuan on its official website, while on e-commerce platforms such as JD.com and Tmall flagship stores, some iPhone models were discounted by more than 1000 yuan.
In recent years, Apple has failed to demonstrate strong innovative products in the high-end computer field. Research firm Canalys believes that in the new year, Apple must seek new market growth points and ecosystem advantages to revive the iPhone business.
However, the pace of Apple's expansion in the Chinese market has not slowed down. The reporter from First Financial News learned that Apple is about to open another flagship store at Jing'an Temple in Shanghai. The retail store will officially open on March 21st.
Apple has also increased its research and development investment in the Chinese market. The company announced on March 12th that it will expand and add laboratories in Shanghai and Shenzhen to support intelligent manufacturing, product reliability, quality, and material analysis.
According to official Apple data, the company's investment in advanced application research laboratories has exceeded 1 billion yuan, and this investment will continue to grow with the addition of new facilities in Shenzhen.
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