Consumers in China will be able to enjoy as much as $68 off on the latest iPhone models in the country between the 4th and 7th of January, 2025. The discounts come as Apple faces declining year-on-year sales and delays in rolling out Apple Intelligence features in the Asian country.
China is Apple’s second biggest market, so a decline in sales in the country has a major impact on the company’s topline. To make matters worse, the company also announced that Apple Intelligence features, already rolled out in the US, won’t be available in China till well into 2025. This unavailability may be a reason why iPhone sales aren’t picking up in China. However, China’s advancement in AI has also meant that local Chinese phone makers are giving Apple a run for its money.
Recently, Apple wasn’t on the list of top 5 smartphone sellers in the country, something that was a cause of worry for Apple shareholders. The recent discounts show these worries are justified as the company scampers to record sales growth in a market it once had a major market share in.
The biggest reason Apple doesn’t yet have AI features in China is because of its main AI partner, OpenAI. Apple integrated OpenAI’s ChatGPT in its phones but OpenAI isn’t available in China. The Chinese government requires generative AI services to first register with the government and obtain regulatory approvals. Since this isn’t ideal for a US firm like OpenAI, Apple is looking to partner with local companies. Tencent and ByteDance are the top two contenders for this partnership, but the talks are still at a very early stage.
In addition to this AI obstacle, Apple is also facing tough competition from a competitors’s AI technology. The thorn in Apple’s side is Huawei, which enjoys the second-largest smartphone market share in China. Huawei received 3 million pre-orders of its triple-folding smartphone Mate XT. Chinese consumers tend to be more attracted to newer features than consumers in the US. As a result, a company like Huawei that is quick to launch AI features can grab the market demand with ease. Huawei’s Mate 70 smartphone is also expected to give tough competition to Apple’s iPhone, making matters worse for the US company.
The ongoing discounts highlight Apple’s struggles in China and shareholders are rightly worried. However, it is not yet a reason to press the panic button as Apple can make up for the lack of sales through better penetration and monetization of its existing user base. Any China-associated dip in the stock price would be a buying opportunity in our opinion.
Apple is 7th on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 160 hedge fund portfolios held AAPL at the end of the third quarter which was 165 in the previous quarter. While we acknowledge the potential of AAPL as a leading investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
