Tim Cook wouldn’t say exactly how much China tariffs will hurt Apple Inc. (NASDAQ: AAPL) sales, particularly the iPhone. The Telegraph reported, “Apple is heavily reliant on China for its supply chain and manufacturing, despite efforts to move production to India and Vietnam.”
What would be much worse, but is possible, is that the Chinese government could block iPhone sales completely and favor local companies Oppo and Vivo, which are already well ahead of Apple in China market share. This has been a major drag on Apple’s share price.
In the most recent quarter, both iPhone sales and Greater China sales were weak. iPhone sales were down a fraction to $69.1 billion. Greater China sales fell from $20.8 billion a year ago to $18.5 billion.
Apple is also struggling with the fact that its artificial intelligence (AI) functions are considered unimpressive compared with other products in the field. The opinion is that the Chinese smartphone companies have better AI, particularly because it is tailored for the local market.
Apple has another problem. Its successful Services business rose year over year from $23.1 billion to $26.3 billion. Though that makes it the second largest part of Apple’s revenue, it does not make up for iPhone weakness.
Apple cannot afford more mediocre iPhone sales. The smartphone has been Apple’s flagship for a decade.
Tariffs will make iPhone prices higher. That adds to the headwinds already in place.
Apple Stock Is Floundering, and AI and China Are Making Everything Worse
Top Gaining Stocks
Top Losing Stocks