China Takes Wind Out Of Apple iPhone Sales

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The company's revenue this quarter will be significantly lower than it had previously indicated, thanks largely to a slowdown in China sales.

The move confirmed investors' biggest fear - a slowing global economy further hindered by the U.S.

Mr Cook traced most of the revenue drop to China, where the economy has been slowing and Apple has faced tougher competition from home-team smartphone makers such as Huawei and Xiaomi.

The stark acknowledgment from the premier US tech company is sending reverberations throughout global markets and even led Citi to ask an existential question: "What if China Sales Went to Zero?"

People walk past an Apple store in Beijing on Dec 11. Apple's problems in China may continue deep into 2019. "While we don't expect zero sales to occur we believe investors will value this framework and the scenario analysis in this report".

Shares in the technology giant fell seven per cent in after-hours trading following the surprise announcement from chief executive Tim Cook.

"Lower than anticipated iPhone revenue, primarily in Greater China, accounts for all of our revenue shortfall to our guidance and for much more than our entire year-over-year revenue decline", Cook said, noting that iPhone upgrades in developed markets like North America and Europe "also were not as strong as we thought they would be".

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He added: "We believe the economic environment in China has been further impacted by rising trade tensions with the United States".

Cook said that while Apple had expected challenges in key emerging markets, it "did not foresee the magnitude of the economic deceleration, particularly in Greater China".

Cook said that, in its earlier projection, Apple had "expected economic weakness in some emerging markets". As the climate of mounting uncertainty weighed on financial markets, the effects appeared to reach consumers as well, with traffic to our retail stores and our channel partners in China declining as the quarter progressed.

President Donald Trump has also raised new tensions between the USA and China by imposing tariffs on more than 200 billion dollars in goods, although so far the iPhone has not been affected directly.

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