On Thursday, the U.S. Department of Justice announced that it was filing an antitrust lawsuit on Apple, the maker of the iPhone. But as that news broke, CEO Tim Cook was on the other side of the world. The Apple chief executive is in China, one of the company’s most important overseas markets where the iPhone maker faces both stiff competition and regulatory scrutiny.
Cook is in China ahead of the China Development Forum, Beijing’s big CEO summit featuring global executives. Cook is reportedly attending the forum.
The Apple CEO, a frequent visitor to China, seems to be on a charm offensive. There’s “no supply chain in the world that’s more critical to us than China,” Cook said on Wednesday in an interview with the media at Shanghai. China is a key manufacturing hub for Apple products, with suppliers like Foxconn operating massive iPhone assembly plants in Chinese cities like Zhengzhou.
Then, on Thursday, Cook helped open a new Apple story in Shanghai. The retail outlet, Apple’s 47th in mainland China, is the largest in the country and the second-largest globally, after Apple’s Fifth Avenue location in New York City.
Last week, Apple announced that it will expand its operations in Shanghai and Shenzhen to strengthen testing and research capabilities for products like the iPad, iPhone and Vision Pro.
Apple’s China challenges
Cook is in China as Apple’s sales in the country come under pressure.
Apple reported $20.8 billion in China sales for the three months ending Dec. 31, 2023, 17% of its total quarterly revenue. Yet the figure represents a 13% year-on-year decline.
The company’s sales in China for the first six weeks of 2024 are down 24% year-on-year, according to data from Counterpoint Research. Apple’s loss has been Huawei’s gain: The latter’s new Mate 60 Pro smartphone, with a locally-made advanced processor, helped boost the Chinese tech company’s sales by 64% in the first six weeks of the year.
A slowing Chinese economy could also be pushing more cautious consumers away from Apple’s premium products. Overall smartphone sales in China fell 7% on-year in the first six weeks of 2024 according to Counterpoint’s data.
Apple is also reportedly trying to move some of its production outside China. Apple suppliers like Foxconn and Luxshare are setting up facilities in Vietnam and India.
Last year Beijing reportedly ordered employees at government department and state-owned enterprises to stop using Apple products.
Not just China
Apple is facing challenges on all fronts. European officials are scrutinizing Apple’s rules for its app store, under the region’s new Digital Markets Act.
On Thursday, the U.S. Department of Justice and 16 states filed a lawsuit accusing Apple of monopolizing the smartphone market and limiting consumer choice. In particular, U.S. Officials accused Apple of blocking rivals from accessing hardware and software features on its devices, and of abusing its control of the app store to make it harder for consumers to switch phones.
An Apple spokesperson told The Verge that the lawsuit sets “a dangerous precedent, empowering government to take a heavy hand in designing people’s technology.”
Apple shares fell 4.1% in Thursday trading, following the announcement of the lawsuit.
