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Apple has suffered a shock fall in China sales as Donald Trump mulls hitting Beijing with tariffs that could hurt the iPhone-maker further.
The California tech giant’s sales in China fell by 11pc from $20.8bn to $18.5bn in the first quarter of its financial year, missing Wall Street estimates by a wide margin. Analysts had expected them to recover.
Its iPhone revenues also fell slightly, when market analysts had expected them to rise, as the company’s new artificial intelligence (AI) service - Apple Intelligence - disappointed consumers.
Lacklustre sales of the company’s iPhone 16 dragged down its smartphone division, however its MacBook and iPad divisions grew. The company recorded overall revenues of $124.3bn in the Christmas quarter, which chief executive Tim Cook hailed as a record.
Shares in Apple, the world’s most valuable company, dropped by around 1.5pc in after hours trading, before recovering to trade up by around 4pc after the company predicted stronger growth in the coming months.
The surprise fall in China sales extends the tech giant’s woes in the country. The company has been struggling in the face of intense competition from home-grown rival Huawei.
Donald Trump may add to the company’s problems. The President has been reportedly mulling import tariffs on Chinese goods of 10pc. Although this is far lower than the 60pc floated during his presidential run, it threatens to hit global technology giants including Apple.
Apple is heavily reliant on China for its supply chain and manufacturing, despite efforts to move production to India and Vietnam. It is also at risk of retaliatory measures from Beijing or a consumer backlash.
Mr Cook has been courting Mr Trump, donating $1m to his inauguration fund and has privately met with him at Mar-a-Lago. So far, the Republican president has delayed implementing any tariffs on China.
Apple’s results come amid a widespread sell-off for technology stocks amid fears China has caught up with the West on AI development after the release of a new model, called DeepSeek. More than $1trillion has been wiped from major technology stocks so far this week.
Despite the turbulence, OpenAI, the company behind ChatGPT, is reportedly raising as much as $40bn in a new funding round that could value it at $340bn, the Wall Street Journal reported.
Apple’s attempt to imbue its iPhones with AI technology has been met with poor reviews after they returned bugs and glitches, such as false news headlines. Apple was forced to halt AI-powered news alerts after the BBC complained they were making errors.