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Strong sales in China boost Apple blockbuster quarter

Jul 31. 2020
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By Syndication The Washington Post, Bloomberg · Bloomberg News

Apple Inc. pulled off a strong quarter in China by switching up retail tactics and pushing a cheaper iPhone, becoming one of the few U.S. tech giants to ride the country's post-pandemic recovery despite Washington-Beijing tensions.

IPhone shipments there surged a surprising 35% in the April to June period, research firm Canalys estimates, driving a 2% rise in Greater China revenue to $9.3 billion. Chief Executive Officer Tim Cook said sales actually grew 6% on a constant-currency basis, propelled by demand for Macs and iPads from millions now accustomed to working from home. Its outperformance in Greater China -- Apple's single biggest international market -- drove quarterly revenue well above Wall Street's forecasts.

Apple's strength in the world's No. 2 economy surprised analysts who've seen local consumers turn increasingly to homegrown brands, at a time Washington accuses the likes of Huawei Technologies Co. and ByteDance Ltd. of spying or jeopardizing national security. Huawei -- the company most squarely in Trump's crosshairs -- eclipsed Samsung Electronics Co. in global smartphone sales for the first time last quarter, thanks in large part to an upswell of home-crowd support.

Apple, whose Chinese-based suppliers employ upwards of a million people, was swift to adapt its tactics after Covid-19 emerged in February, turning to third-party distributors after shutting most of its stores. It also focused on marketing and selling online, tapping the surge of internet activity that followed a rolling nationwide lockdown.

The iPhone maker jumped aboard a plethora of online sales promotions hosted by Alibaba Group Holding Ltd. and JD.com Inc. in June, traditionally one of several peak spending months. Apple moved more than $72 million (500 million yuan) of devices in a single day during JD's "6.18" shopping marathon, the Chinese company said. It probably also benefited from the introduction of a lower-cost smartphone, the iPhone SE.

"Apple defied expectations in Q2. Its new iPhone SE was critical in the quarter," Canalys analyst Vincent Thielke said. "Apple is also demonstrating skills in new user acquisition."

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