Apple is expected to see its biggest revenue jump in two years when it releases quarterly earnings on Thursday, Oct. 31. While there will be a lot of talk about the state of Apple Intelligence, its iPhone sales are currently boosting the bottom line.
In the three weeks following the iPhone 16’s release, sales in China were 20% higher than sales for the iPhone 15 the prior year, according to Counterpoint. Customers are increasingly trading up to the more expensive models.
In China, the increase in sales could have less to do with the quality of the phone and more to do with the company’s current standing in the nation.
“Apple works with 1,600 factories in China, and they’re very much deeply embedded, not just to get access to the excellent production that the Chinese factories do, but also in terms of really embedding what we call tacit knowledge into those Chinese factories,” Doug Guthrie, executive director and professor of global management at Arizona State University said.
Guthrie previously worked with Apple advising executives in China.
“It’s very clear that Tim Cook and the executive team really continue to be committed to the idea that Apple’s married to China,” Guthrie said.
Last year, Chinese government agencies banned workers from bringing iPhones to work, instructing employees to carry local brands. The move quickly damaged Apple’s stock and sales of the iPhone dipped to third in the country.
“In China, people buy what products are promoted by the government,” he added. “And so my guess is that this is a signal that Apple’s doing things right and in good space with the government right now.”
The recent uptick in sales has now pushed the iPhone into second place in smartphone sales in the Chinese market, according to IDC.
Overall, Apple’s revenue is expected to grow 5.7% in the fiscal fourth quarter, according to data from LSEG.
While Apple is getting a boost from sales in China, the company is reportedly attempting to reduce its reliance on the nation for manufacturing of the devices.
The company exported $6 billion worth of Indian-made iPhones between March and September, according to Bloomberg. The increase marks a 33% jump from the same period last year.
“India is a country that is equal in size in terms of its population and has equal size of migrant labor population and poor people,” Guthrie said. “So India is a real interesting threat. When Foxconn built a plant in Chennai and suddenly iPhones could be assembled in Chennai, I think it was a signal to the market, ‘Yes, we’re married to China, but we have other options now.’”
Still, Guthrie points to those 1,600 suppliers Apple relies on in China. He said it would take India three decades to build supply chain infrastructure to mirror what exists in China.
Replacing China’s place in the manufacturing chain would be a lengthy and lofty goal. At the same time, Guthrie says the resolution of a border dispute between China and India at the BRICS Summit is a signal that the two nations could be working in tandem into the future.
“Maybe this is a moment where there’s a big pivot away from the West. And Xi Jinping and [Narendra] Modi and others are thinking, ‘Okay, you guys can do your G7 thing over there, and we can be at the kids’ table at the G20, but we’re BRICS and it’s bigger than you thought,’” Guthrie said. “And so I think it’s a really interesting time to watch this because my guess is what we’re going to see is more collaboration and coordination between China and India.”
