Apple could double its presence in the Chinese market, says Wedbush, as iPhone sales decline
SHANGHAI, CHINA – MARCH 21: Apple Inc. CEO Tim Cook arrives at the opening ceremony of the new Apple Jing’an store on March 21, 2024 in Shanghai, China. The new Apple Store opens on March 21 in Shanghai’s Jing’an district. (Photo by VCG/VCG via Getty Images)
Apple could double its presence in the Chinese smartphone market amid declining iPhone sales and strong competition in the country, Wedbush Securities said on Monday.
Apple must overcome its challenges in China, including a difficult macroeconomic environment and competition from Huawei, before launching the iPhone 16, and “it all starts with reaffirming Apple’s presence in China,” Wedbush said.
China’s Commerce Minister Wang Wentao met with Apple CEO Tim Cook on Friday and said his country offers opportunities for Apple and other companies and urged the iPhone maker to further expand its business in China for “common development,” it said in a press release.
Cook said China is an important supply chain partner for Apple and the company plans to increase investment in the country over the long term, the statement said.
Last week, Cook opened Apple’s newest flagship store in Shanghai on Thursday and met with key suppliers in China, according to media reports. He also attended the China Development Forum in Beijing as China seeks to attract foreign investors amid regulatory and global uncertainties.
Cook’s latest trip to China, which Wedbush says is “a sign that Apple could be doubling down in China,” comes amid reports that iPhone sales in China plunged 24% in the first six weeks of 2024 are.
Apple is facing a challenging environment in its largest overseas market, China, as the company faces stiff competition from local Chinese smartphone makers, particularly Huawei, whose consumer business in the country has been on the rise since the year Launch of its smartphone Mate 60.
“The timing of this trip was important because essentially Apple needs China and China, despite all the excitement, needs Apple,” Wedbush said.
The Covid-19 lockdowns in China in late 2022 caused significant disruptions to Apple’s supply chain, prompting the tech company to shift some of its production to countries such as India and Vietnam.
“However, the vast majority of its iPhone production and suppliers will remain in China,” Wedbush said, but maintained his “outperform” rating and a $250 price target on Apple.
Apple is currently facing regulatory challenges in the US and EU, and while sales in China fell this year, the company emerged as the country’s largest smartphone vendor last year.
The US Department of Justice sued Apple on Thursday, saying the technology company illegally maintained a monopoly on smartphones. The EU opened an investigation against Apple on Monday in connection with the so-called anti-steering rules.…Read more by Emma Poole
