Apple's Margins Hit Near Decade-Low In China Due To Discounting, Weaker Yuan, Says Analyst: Competitive Pressure Or Management's Deliberate Plan?
Portfolio Pulse from Shanthi Rexaline
Apple's operating margins in Greater China have hit a near decade-low due to iPhone discounting and a weaker yuan, according to Morgan Stanley analyst Erik Woodring. Despite this, Apple's Services segment showed strong growth driven by advertising, App Store, and Cloud. Apple shipped 45.6 million units in the June quarter, but its market share slipped as Chinese competitors like Xiaomi reported higher growth rates.
August 07, 2024 | 7:56 am
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POSITIVE IMPACT
Xiaomi reported double-digit growth rates in the June quarter, outperforming Apple in the Chinese market. This indicates strong competitive pressure on Apple from domestic players.
Xiaomi's strong performance in the Chinese market highlights the competitive pressure on Apple, which could benefit Xiaomi's market position and stock price in the short term.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 50
NEGATIVE IMPACT
Apple's operating margins in Greater China have declined significantly due to iPhone discounting and a weaker yuan. However, the Services segment showed strong growth driven by advertising, App Store, and Cloud.
The decline in operating margins in Greater China is a significant concern for Apple, especially given the competitive pressure from domestic players. However, the strong performance of the Services segment provides some offsetting positive news.
CONFIDENCE 95
IMPORTANCE 90
RELEVANCE 100