Smartphone sales in China aren’t going exactly as planned for Apple, so the company is very likely to report disappointing earnings for its fourth fiscal quarter this year.
Goldman analyst Rod Hall believes slower than anticipated sales in this particular market could lead to an overall market decline of 15 percent year over year.
“There are multiple signs of rapidly slowing consumer demand in China which we believe could easily affect Apple’s demand there this fall,” he was quoted as saying in an investor note according to CNBC.
“Much of Apple’s upside potential in our thinking was centered on Chinese demand for larger screen sizes,” the analyst added. “Should weak consumer demand persist and impact the higher end of the market Apple’s potential to beat and raise in FQ4’18 earnings is likely reduced.”
While the new iPhone lineup could slow down the decline, it’s believed a certain impact could still impact Apple’s earnings. Cupertino will report its fiscal Q4 results on November 1.
iPhone XS in China
Apple’s 2018 iPhone lineup is specifically tailored for the Chinese market. All three models, namely iPhone XS, iPhone XS Max, and iPhone XR come with dual-SIM support, and in all markets but China, they are offered with a mix of a traditional SIM and eSIM.
The Chinese version of these three devices come with two standard SIMs and a special tray design to accommodate them, and Apple believes this way it can eat up Android’s market share. Many Chinese buyers are looking for dual-SIM capabilities, and given that Android devices were the only ones offering it until this year, most of them decided to go for Google’s mobile OS.
Recent reports have also indicated that new iPhone sales are below expectations in China, which is one of the reasons CEO Tim Cook traveled to the country, but we’re going to find out more during the company’s earnings report in two weeks.