China Conundrum: Apple's Fastest-Growing Market Barely Saw iPhone Volume Growth In Q2

Apple, Inc.'s AAPL strong June quarter performance was underlined by its solid showing in China — a key market for the tech giant. A new report, however, shows iPhone shipments in the region that encompasses China grew only at an anemic pace.

Apple Lags Local Players In China: Apple shipped 7.9 million smartphones in China in the June quarter, up merely 2% from 7.7 million a year ago, according to a new report from market research firm Canalys. 

In comparison, Vivo shipped 18.2 million smartphones, up 23% from the year-ago quarter. Oppo stood second, as its shipments climbed 10% to 16 million units. The standout, however, was Xiaomi. Its shipments jumped 35% to 12.6 million units.

Apple's numbers may not seem that bad when overall China shipments are taken into account. Shipments of smartphones slid about 17.5% in China in the June quarter and stood at 74.9 million. Most companies other than the major vendors saw year-over-year declines.

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Apple's Greater China Revenues Tell Different Tale: Apple's June quarter results released Tuesday showed the Greater China region, which includes mainland China, Hong Kong, Taiwan and Macau, fetched the company revenues of $14.76 billion.

Greater China's revenue share of the total was at 18.12%, and the year-over-year growth stood out at 58.24%, better than Apple's other geographies.

Analyzing The Anomaly: Strong revenues versus modest volume bring up the question of where the mismatch lies. As opposed to Apple, which sells only a handful of models, local players have a slew of products on offer.

Apple's iPhones are premium-priced phones as opposed to local Chinese companies, which compete mainly on affordable pricing.

Additionally, the current iPhone cycle saw fast sales of premium iPhone variants, while the cheaper iPhone mini did not fare well, forcing Cupertino to consider phasing out the smaller version of its flagship product.

The China strength is attributable to very strong 12 Pro and 12 Pro Max sales in China, Needham analyst Laura Martin said in a note reviewing the June quarter results.

A higher mix of high-end phones may have helped Apple report strong sales in China.

There are a few caveats while interpreting the two set of numbers. Apple's Greater China revenues also include sales from other Apple products and its services. Additionally, Canalys' data relates to only mainland China.

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Photo: courtesy of Apple.