Apple will face weaker demand in China.
Apple will need to brace for a drop in demand in China as shoppers begin to cut back on spending in the anemic economy, some analysts warned on Friday, after the iPhone maker said demand had rebounded in the middle of the month. June as restrictions due to COVID-19 significantly hampered sales.
Apple on Thursday reported that quarterly profits in China had fallen by 1 percent, ending a strong chain of quarterly profits in the region.
Overall, Apple’s earnings rose 2 percent, beating expectations, and the company said there was no decline in global demand for iPhones despite negative macroeconomic indicators.
Apple CEO Tim Cook blamed the decline in profits in China on strict restrictions in Chinese cities, which forced millions of people to stay indoors and also hit the Chinese economy hard.
“We saw lower demand based on the COVID restrictions in cities where those restrictions had had a big impact. And we saw a recovery in those same cities at the end of the second quarter in June,” Cook said.
Tight restrictions in an effort to stamp out COVID have damaged a recovery in the world’s second-largest economy, as consumer confidence hovers near a record low, private investment slumps and youth unemployment hits a record 19.3 per percent, prompting calls for emergency aid from the government.