Apple has finally stemmed its losses in China. But the success might only be short-lived.
The tech giant’s iPhone sales in China for the third quarter hit 11 million units, up from 8 million units sold during the third quarter of 2016, according to researcher Canalys. Better yet for Apple, it was the first time in six quarters that the company registered higher year-over-year iPhone sales. It’s also Apple’s best iPhone sales performance in China in two years.
But there’s a problem.
According to Canalys, which analyzes the Chinese smartphone market each quarter, Apple’s success in the third quarter was due only to “pent-up demand of iPhone upgraders.” Looking ahead to the fourth quarter, Canalys research analyst Mo Jia thinks Apple’s shipments will again decline.
“Apple is unlikely to sustain this growth in [the fourth quarter,” the analyst said.
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China is an exceedingly important market for Apple that generates the company billions in revenue each quarter. However, Apple’s China sales across all products, including the iPhone, have dropped precipitously over the last couple of years. Concerned that a major market might be turning its back ever so slightly on Apple, investors have asked for answers.
Apple’s (AAPL) executive team has continued to say that China is critical to the company’s future. The team also believes that the recent declines are short-lived and reflect early success that is now self-correcting. Ultimately, Apple believes China sales will return to growth.
Looking ahead, Canalys said that Apple’s upcoming iPhone X is attracting demand, but its high price and low supply could combine to garner few sales and ultimately won’t help iPhone sales in the country.
Apple will report its fiscal fourth quarter earnings, which include China sales data, on Thursday.