Tech

Apple roars back to growth in China

Key Points
  • Apple reported quarterly earnings on Thursday.
  • CEO Tim Cook said a year ago that China would be a key to Apple's growth going forward.
An attendee uses a new iPhone X during a presentation for the media in Beijing, China October 31, 2017.
Thomas Peter | Reuters

Apple CEO Tim Cook made good on his promise: Apple's business in China is growing again.

Apple reported on Thursday. The company said revenue in China was $9.8 billion during the fourth fiscal quarter, up 12 percent year over year and up 22 percent sequentially. Last quarter, sales were down 10 percent year over year and 25 percent sequentially in the region.

"We increased market share for iPhone, Mac and iPad during the quarter. We hit all-time revenue records for services for the PRC during the quarter, we had very strong iPad revenue growth, we had double-digit unit growth in iPhone, and both the upgraders and Android switchers were up on a year-over-year basis during the quarter. So the results were broad-based — they were pretty much across the board," Cook said of China on a conference call.

Apple was also helped by easier comparisons to the year-ago quarter, and easing pressure on exchange rates in Hong Kong.

"I feel great about the results," Cook said.

Cook said a year ago that China would be a key to Apple's growth going forward. Earlier this year, the company promoted Isabel Ge Mahe to a new position as Apple's vice president and managing director of greater China, reporting directly to Cook and Chief Operating Officer Jeff Williams.

"We are very bullish on China," Cook said on the fourth-quarter earnings call last October. "We continue to see a middle class that's booming there."

Shaking the slump in China is no small feat.

While Chinese brands like Huawei, Oppo, Vivo and Xiaomi have struggled to gain traction in the U.S., they all outpace Apple in terms of units sold in China, according to . Chinese consumers also use apps like WeChat to perform some of the functions of Apple's operating system, and Chinese regulators have a somewhat uneasy relationship with American technology companies.

Pre-orders also work slightly differently in China, Cook said.

Cook said he expects to take an analogous approach in another huge market, India, where Apple now manufactures many iPhone SE models. The cell service in India is "materially better" than a year ago, creating a "sea change" in India, Cook said.

"It's building stores, it's building channels, it's building markets, it's building the developer ecosystem, it's having the right product line up for the market," Cook said. "I feel like we're making good progress there and are gaining understanding of the market, but we still have a long way to go, which I sort of see as an opportunity instead of a problem."

Apple's chief financial officer said emerging markets helped lead Apple's iPad growth, with iPad unit sales were up 25 percent year-over-year, and India, which grew 39 percent.

"Our emerging market performance during the quarter was very strong," Cook said. "If you take China out, it's even strong, but you can see the China rebound .... we just had a phenomenal quarter."