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Apple faces chill in Chinese market as innovation lags: analysts

(Global Times)    14:40, November 15, 2018

US technology giant Apple Inc has embraced its downward trend in the Chinese market not only in product sales but also business operations, even lagging behind domestic vendors in technological innovation, an industry analyst told the Global Times Wednesday.

Shares of Apple fell a further 1 percent to $192.23 per share as of the close on Tuesday (US time). It slumped by 5.04 percent to $194.17 at Monday's closing, losing nearly $50 billion in market capitalization.

The declines reflect investors' rising worries over deteriorating iPhone demand after two key suppliers for the device cut earnings projections for the coming months, the Wall Street Journal reported on Monday.

For example, Japan Display Inc, which supplies screens for the iPhone XR, cut its earnings estimate for the fiscal year, which ends in March. It said orders for its latest liquid crystal display panels would be much lower than its initial expectations for the fiscal fourth quarter, the report said.

On Tuesday, another Apple supplier - Qorvo - followed suit in cutting its forecast, citing "recent demand changes for flagship smartphones," media reports said.

Among Apple's 200 suppliers, 27 are from the Chinese mainland. "Traditional suppliers like Foxconn are meeting with obstacles and some are cutting jobs due to the unsatisfactory sales of Apple products," said Sun Yanbiao, head of Shenzhen-based research company N1mobile.

Sun said that most domestic suppliers for Apple, except new ones offering innovative technology, are struggling with weak profits. Many are trying to reduce dependence on Apple's business, Sun said.

For example, Changsha-based Lens Technology, a glass provider for smart digital devices, has reduced its reliance on Apple, which generated 60 to 70 percent of its revenues in 2015. The proportion has been cut to about 40 percent, Sun estimated.

The hardware supplier now works with domestic mobile phone vendors such as Huawei, Xiaomi, and Oppo.

"Apple is relying on its die-hard fans as it hikes prices but offers less technological innovation," said Sun.

"Apple peaked with its iPhone 8... The charisma of CEO Tim Cook, who made Apple into a company with high revenue and high profits, is fading," he noted.

Apple introduced its most expensive iPhone this September with relatively small changes to its lineup. The iPhone XS sold at a starting price of $999. The XS Max, the largest iPhone to date and one of the biggest on the market, has a 6.5-inch screen and sells at prices starting from $1,099.

But gaps in design and technology between domestic brands and Apple have obviously narrowed in recent years, with Chinese products starting to take the lead, Sun noted.

For example, Chinese vendors like Oppo and Vivo undertook structural innovation this year. Start-up Royole Corp just unveiled the world's first flexible display foldable smartphone.

"But Apple is just preparing to introduce its foldable devices," said Sun.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Liang Jun, Bianji)

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