iPhone 14 discounts suggest lower than expected demand in China

Two of China’s biggest smartphone retailers are offering iPhone 14 discounts equivalent to well over $100 – a level of price cut usually restricted to older handsets.

One analyst estimates that sales of the four iPhone 14 models were some 28% lower than those of the iPhone 13 line-up at the same point …

Background

Apple recently reported its holiday quarter revenue, which was down 5% year-on-year, with iPhone revenue some 9% lower than the previous year.

Analysts had expected revenue to fall, but the size of the hit took them by surprise – though investors were reassured once they were offered insight into the numbers by CEO Tim Cook.

First, he said, the problem with the iPhone was not demand, but rather being unable to keep up with it.

Second, the strong dollar meant that although the dollar value of overseas sales was down, local revenue was actually up.

Third, the wider economic environment.

Cook also said that iPhone 14 supply issues were now resolved, painting a more optimistic picture for earnings in the current quarter.

iPhone 14 discounts in China

However, Bloomberg reports that while demand may not have been the issue globally, it does appear to be so in the iPhone maker’s second-largest market.

Apple’s latest iPhones are selling at discounts of more than $100 in China, an unusually steep price cut just months after launch that suggests dwindling demand for even its highest-end devices.

JD.com Inc. and state carrier China Mobile Ltd. are among the retailers taking 800 yuan ($118) off the iPhone 14 Pro range over 11 days. Retailers in the southern electronics hub of Shenzhen have also begun cutting prices for the same handsets by 700 yuan, the official China Securities Journal reported after visiting outlets around the city.

Generally, such significant discounts are only offered on older iPhone models.

Jefferies analyst Edison Lee says that this means discounting has increased from 3-4% to 7-9% in just one month, a likely sign of weak demand.

As is now the new normal, Apple didn’t offer specific guidance for the current quarter, but did suggest that the overall outlook was similar to that of the last quarter, indicating that we can again expect to see a year-on-year fall in revenue.

Photo: Thai Nguyen/Unsplash