Following severe COVID-19 restrictions in China that severely hurt the economy and accompanying protests that disrupted iPhone production at its top supplier Foxconn, Apple is anticipated to disclose its first quarterly revenue decline in almost four years.
Investors will be interested in learning more about how Chief Executive Tim Cook is attempting to increase demand in a struggling economy that has led to many layoffs in the technology sector, a move Apple has so far managed to avoid thanks to cost-conscious recruiting during the pandemic.
According to Krish Sankar, an analyst at Cowen, “with supply chain difficulties essentially rectified, we now believe Apple is entering a phase of slower demand due to macro reasons.” Sankar also predicted that 2 percent fewer iPhone units would be sold in 2023.
According to Refinitiv, the largest publicly traded firm in the world is anticipated to announce on Thursday that iPhone sales decreased by approximately 5% for the crucial holiday quarter. The last time iPhone sales declined was in the months following the COVID-19 outbreak in 2020, from August to October.
Because of the effects of COVID-19 and the Russia-Ukraine crisis, UBS experts predict that iPhone sales in the United States have fared better than in China and Europe.
After supply limitations in the first quarter and some demand lost due to product unavailability during the holiday season, some demand for the iPhone will probably be pushed into the current quarter, according to BofA analyst Wamsi Mohan.
Another effect of consumers’ spending restraints is that the company’s services division, which houses Apple’s music and video streaming services, is expected to achieve its lowest revenue growth for the Christmas quarter.
The disruption at the largest iPhone manufacturing facility in the world, in Zhengzhou, China, led Apple to issue an unusual warning in November and resulted in a shortage of higher-end iPhone 14 models during what is usually its busiest sales quarter, driven by product debuts and the holiday season.
Greater China, which includes Hong Kong, is crucial to Apple’s success and accounts for around a fifth of its annual revenue. The Cupertino, California-based tech giant cut its total sales projection for 2019 as a result of the country’s economic slowdown following the Sino-US trade war.
Analysts anticipate a far quicker recovery this time around though, as factories have resumed operations in China and Apple has expanded its production footprint with facilities in India.