Apple could double down on China market, Wedbush says, as iPhone sales drop

Wedbush Securities said on Monday that Apple may increase its focus on the Chinese smartphone market, despite dwindling iPhone sales and fierce competition.

Apple must overcome China’s hurdles, including a difficult macroeconomic environment and competition from Huawei, before releasing the iPhone 16, and “it all starts with reaffirming Apple’s presence in China,” Wedbush stated.

China’s Minister of Commerce, Wang Wentao, met with Apple CEO Tim Cook on Friday and encouraged the company to expand its business in China for “shared development,” according to a press statement.

Cook stated that China is an important supply chain partner for Apple, and the company intends to boost its investment in the nation in the long run, according to the statement.

Cook visited Apple’s newest flagship shop in Shanghai last Thursday and spoke with key suppliers in China, according to media sources. He also attended the China Development Forum in Beijing, as China strives to entice international investors amidst regulatory and global uncertainty.

Cook’s current trip to China, which Wedbush described as “a sign Apple could double down” on China, came amid news that iPhone sales in China fell 24% in the first six weeks of 2024.

Apple is operating in a hard climate in its largest overseas market, China, where it confronts stiff competition from local Chinese smartphone producers, particularly Huawei, whose consumer business is resurging in the country following the release of the Mate 60 smartphone.

“The timing of this trip was important as in essence Apple needs China and China needs Apple despite all the noise,” Wedbush said in a statement.

Covid-19 lockdowns in China in late 2022 severely disrupted Apple’s supply chain, prompting the company to shift some of its production to nations like as India and Vietnam.

“However, the vast majority of its iPhone production and suppliers will remain in China,” Wedbush said, with a “outperform” rating and a $250 price target for Apple.

Apple is currently facing regulatory problems in the United States and the European Union, and while its sales in China have declined this year, the business emerged last year as the country’s largest smartphone provider.

The US Department of Justice filed a lawsuit against Apple on Thursday, alleging that the tech company illegally maintains a smartphone monopoly. On Monday, the EU began an investigation into Apple in connection with the so-called anti-steering laws.