- Data from numerous sources collated by CNBC painted a positive picture for Apple since February, at the height of the coronavirus outbreak in China.
- Apple sold 3.9 million iPhones in China in April, according to CINNO Research. That's a 160% increase from March.
- Apple's iPhone SE, which went on sale in late April, may suffer a lack of demand in China, according to analysts.
- Other headwinds include the lack of a 5G iPhone and uncertain economic future in China.
Apple sales in China continued to recover in April, thanks in part to the release of a cheaper iPhone.
It comes as the world's second largest economy slowly reopens again after the coronavirus forced store closures earlier this year that caused sales to plummet.
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Still, analysts cautioned the U.S. technology giant could face a rocky road ahead in one of its most critical markets — China.
Data from numerous sources collated by CNBC painted a positive picture for Apple since February, the height of the coronavirus outbreak in the country.
Sales for the iPhone in China dropped a staggering 60% year-on-year in February this year. Apple was forced to close stores for a number of weeks as authorities sought to stem the spread of Covid-19. By mid-March, all the stores in China had reopened.
Apple sold 3.9 million iPhones in China in April, according to CINNO Research. That's a 160% increase from March, when it sold 1.5 million smartphones, the Shanghai-based market research firm told CNBC.
Apple's sell-in shipments totaled around 3 million in April, according to preliminary estimates by another research firm, IDC. That's a roughly 30% increase compared to a month ago.
Sell-in refers to the number of iPhones Apple sold to its retail partners in China and can be used as a gauge for future demand.
In April, overall smartphone shipments in China rose over 94% versus March and reached 40.8 million, according to state-backed think tank, China Academy of Information and Communications Technology.
Apple sells via a number of official retailers. One of them is Alibaba-owned e-commerce site, Tmall.
Revenue from sales of all Apple products via its official store on Tmall jumped nearly 40% month-on-month in April to $127.6 million, WPIC, an e-commerce tech and marketing firm that helps foreign brands sell in China, told CNBC. For iPhones alone, revenue from Tmall rose over 33% month-on-month to just over $80 million.
Meanwhile, there were also signs of life in Apple's services revenue. While it is comprised of many different products —from Apple Music subscriptions to iCloud, CNBC was only able to obtain estimates for consumer spending in China on the App Store. That figure was $1.53 billion in April, or a 7% month-on-month increase, according to Sensor Tower, which tracks app spending numbers.
Apple did not respond to CNBC's request for comment.
The various data points to a rosier picture for Apple's business in China, a very important market for the company. But analysts warn the Cupertino giant could face some headwinds in the next few months.
iPhone SE bump?
Apple released the second generation iPhone SE in mid-April which subsequently went on sale in China later that month. It starts at 3,299 yuan ($464) in the mainland.
CINNO Research said the iPhone SE accounted for 24% of all of Apple's 3.9 million iPhone sales in April, despite only going on sale later in the month.
IDC said the iPhone SE accounted for around 8% of shipments in April. But one analyst said that the figure may not necessarily reflect demand.
"We see that the demand is not as strong as this supply," Will Wong, research manager at IDC, told CNBC.
The demand for 5G phones though is rising meteorically which could bring some headwinds to Apple's overall volumes in (the) coming months until a 5G iPhone is launched.Neil Shahresearch director at Counterpoint Research
On top of that, there are concerns that the epidemic could deal a sharp blow to China's economy for the rest of the year, which could impact consumer spending.
"It's still tough. It's tough not only for Apple but also all smartphone makers. For Apple it's tough because right now, the economic situation is not so good and consumer sentiment has not fully returned to the normal levels," Wong said.
He added that consumers may choose mid-to-low-range smartphone models. Apple has only one device in that category — the iPhone SE — whereas other vendors, such as Chinese phone-makers Xiaomi or Huawei, can cater to customers looking for cheaper handsets.
"Users previously may have considered to buy Apple but right now they may choose Huawei as they might get a phone with cheaper price and good features," Wong said.
5G in China
Meanwhile, smartphones with 5G connections have taken off in China after the country started rolling out its networks last year. These next-generation mobile networks promise super-fast data speeds.
A number of Chinese vendors including Huawei and Xiaomi have released 5G smartphones, but Apple has not unveiled one yet. This is important because 5G devices are expected to account for 40% of total smartphone sales in China in 2020, according to Counterpoint Research.
If Apple does not launch a 5G phone, consumers could shop elsewhere for one, or hold off on buying a new iPhone until Apple releases one.
"The demand for 5G phones though is rising meteorically which could bring some headwinds to Apple's overall volumes in (the) coming months until a 5G iPhone is launched," Neil Shah, research director at Counterpoint Research, told CNBC.