Tim Cook Sees Apple Products Covered By Beijing's Subsidy Program As iPhone Maker Faces 11% Revenue Decline In China: 'Fiscal Stimulus Occurring'

Apple Inc. AAPL reported an 11% decline in first-quarter revenue for Greater China to $18.51 billion, while CEO Tim Cook highlighted a new national consumer subsidy program that could impact future sales in the region.

What Happened: During Thursday’s earnings call, Cook specifically addressed China’s recently announced fiscal stimulus measures. “In terms of the macro situation, there was a fiscal stimulus or subsidy announced…very recently in January that did not affect the December quarter,” Cook said, noting that while some provincial subsidies were active in the December quarter, the national program was only announced on Jan. 20.

The Chinese stimulus covers the categories of products Apple offers, including smartphones, tablets, PCs, and smartwatches, up to a certain price threshold. “We do see fiscal stimulus occurring,” Cook said, acknowledging the headwinds in China.

Cook maintained an optimistic stance on the company’s second-largest market, even as Chinese leader Xi Jinping‘s government implemented what Morgan Stanley calls the “most aggressive stimulus tone in a decade” to boost consumption through moderately loose monetary policy.

Gene Munster, managing partner at Deepwater Asset Management, provided context for the apparent downturn, noting that approximately half of the weakness in China was attributable to inventory management rather than fundamental demand issues. “The mess wasn’t as big as it looked in the numbers,” Munster stated on X.

See Also: Jim Cramer Wonders If Baidu Could Be Next After Alibaba’s AI Model Outperforms DeepSeek

What Happened: The company’s performance comes amid broader economic challenges in China, where GDP growth in 2024 fell below targets, growing between 2.4% and 2.8% according to Rhodium Group estimates. The Chinese government’s stimulus strategy includes lowering borrowing costs and reducing bank reserve requirements to increase lending, measures that could potentially boost consumer spending.

Apple’s strategic approach in China includes embracing local innovation, as evidenced by Cook’s praise for Chinese AI startup DeepSeek. “In general, I think innovation that drives efficiency is a good thing,” Cook said during the earnings call while detailing Apple’s hybrid AI model that combines on-device processing with cloud partnerships.

Goldman Sachs analysts warn that U.S. trade policies under President Donald Trump‘s administration could pose additional challenges for the Chinese market.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.