China buying more iPhones than US

Tim Bradshaw
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Apple is expected to say this week that it has sold more iPhones in China than on its home turf in the US for the first time last year, highlighting the shifting power balance of the smartphone market.

Analysts estimate that the US tech group reached the turning point in iPhone sales after expanding its presence in China last year via a deal with China Mobile, the country's largest network operator, and after the release of the latest iPhone 6 in the country in October.

The iPhone's growing market share in China comes as Samsung, the global market leader by smartphone volumes, has stumbled and the region has seen the rapid rise of low-cost challenger Xiaomi.

Tim Cook, chief executive, had said in 2013 that he expected China to eventually overtake the US as Apple's single largest source of revenue. The iPhone already accounts for more than half of Apple's total sales and an even larger share of its profits.

iPhone boosts Apple's mobile market share
iPhone boosts Apple's mobile market share

Analysts at UBS estimate that China accounted for 36 per cent of iPhone shipments in the most recent quarter, compared with 24 per cent for the US. During the same period last year, 29 per cent of units were sold in the US and 22 per cent were in China, UBS said.

"It's already been a good year, building up to the climax of this quarter," said Ben Bajarin, analyst at Creative Strategies, referring to Apple's momentum in the world's largest smartphone market. "It leads to a lot more optimism for China . . . Their potential headroom in China is higher than it is here [in the US]."

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Mr Bajarin's forecast suggests around 2m more iPhones were sold in China than North America in the quarter. He added that the launch of Apple's new Watch in China in the coming months was likely to increase loyalty among first-time Apple customers.

"They will likely do more in China than US from here on out," he said. "It certainly shows how important the China market is to Apple's upside."

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While China's mobile market is larger and growing faster than in the increasingly saturated US, Apple faces challenges there too, from new competition to run-ins with the Chinese government. The latest iPhones' Chinese release was delayed by almost a month after a protracted regulatory review process.

China is becoming more important to Apple but that does not mean the iPhone is as significant a player there as it has been on its home turf of the US. Lower-cost devices, most using Google's Android software, still dominate the Chinese market.