Chinese Are Buying Fewer iPhones But Growth In App Store Signals Rebound For Apple: Report

As China canceled coronavirus lockdowns, the sales of Apple Inc’s AAPL iPhone saw a resurgence, but May data shows a reversal in the trend.

What Happened

Citing Shanghai-based research and consulting company CINNO Research’s figures, CNBC noted Tuesday that sales of iPhones fell from 3.9 million units in April to 3.6 million in May.

The May figure is 7.7% lower than April’s but beats the 3.05 million iPhones sold in May 2019.

Will Wong, a research manager at a market intelligence firm DC attributed the low sales to weak consumer sentiment and “job concerns, because of the economic slowdown.”

Contrary to the decline in iPhone sales, spendings in the App Store in China rose by 11% to $1.71 billion in May from $1.53 billion in April.

Why It Matters

iPhone’s April sales clocked a 160% increase over March. Sell-in shipments, sales made to retail partners, grew 30% to 3 million in April compared with the preceding month.

The sales of the iPhone in China took a hit in February when they plunged 61% year-on-year to 494,000 as coronavirus gripped the country, and the company was forced to close its stores.

Apple reopened all its 42 stores on mainland China in March.

A rise in App Store sales is significant as it underpins Apple’s services business, which brought in $46 billion in sales in the last financial year, reports CNBC.

Consumers may not be purchasing an iPhone as they are waiting for the release of a 5G model. 46.3% of all mobile phones shipped in China in May were 5G devices.

A Wedbush Securities analyst estimates that 350 million of 950 million iPhones globally are ready for an upgrade, which could translate into a “5G super cycle.”

Price Action

Apple shares traded 0.36% lower at $365.20 in the after-hours session on Tuesday. The shares had closed the regular session 2.13% higher at $366.53.