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iPhone Sales in China Are Reportedly Growing Sharply

By Daniel Sparks – May 14, 2020 at 7:01AM

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iPhone sales in the country may be up 30% year over year in April, according to one analyst's estimates.

Apple's (AAPL -3.00%) Greater China segment weighed on the tech giant's results in fiscal Q2, which ended on March 28, 2020. After a strong January, demand for Apple's products in the market fell in February, when many stores in the region were shut down as the Chinese government attempted to mitigate the spread of the virus. While a recovery in Apple's business started in March as the company reopened its stores, sales were still recovering when the quarter ended. 

However, things may be looking up in the region in Apple's fiscal third quarter. iPhone sales in China not only increased sharply in April compared to March, but they also jumped on a year-over-year basis, according to one analyst's estimates.

Apple's 2020 iPhone SE

iPhone SE. Image source: Apple.

Strong April iPhone sales in China

Smartphone sales in general seem to be doing well in April. Total smartphone shipments in China jumped 98% in April compared to March and 14% year over year during the month, according to data from China's Ministry of Industry and Information Technology. 

Apple, however, may be taking market share from other smartphone brands in the market, according to Barclays analyst Tim Long. The analyst believes iPhone sales, specifically, rose about 30% year over year in China during April.

Since iPhone typically accounts for more than half of Apple's total revenue, this bodes well for the trajectory of the tech company's overall revenue trend in its Greater China segment. In fiscal Q2, Greater China revenue fell 7% year over year. If iPhone sales in the market really are this robust in April, the geographic segment has a shot at returning to growth in fiscal Q3.

Thank you, iPhone SE

Apple's new iPhone SE, which was launched in April, may be helping give iPhone sales a boost in the market. The new phone is priced $600 below the company's flagship iPhone 11 Pro and $700 lower than its iPhone 11 Pro Max, making it a great device for the Greater China market, where discretionary income is lower than in the U.S. Though shipments of the phone didn't begin in the market until the end of the month, Long believes the device's availability provided a lift for the product segment in the market.

Another catalyst for iPhone in Greater China is discounting, Long believes. On average, he calculates iPhone discounts in China at about 7%.

Apple's new aggressively priced iPhone SE and promotional discounts are luring in customers and helping iPhone sales grow sharply in April, according to Long.

Of course, demand for iPhone likely remains weak outside of China during fiscal Q3, as many Apple stores still remain closed as countries continue to fight off the coronavirus. But the agility with which iPhone sales may be bouncing back in China in April paints an optimistic picture for how they could spring back in other markets when economies outside of China similarly open back up.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.

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