Apple's China headache isn't going away anytime soon
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- Apple missed sales estimates in Greater China last quarter.
- Greater China is a key market for Apple, with new AI features expected to roll out in April.
- Wedbush analysts said Apple may partner with Chinese tech firms like Baidu to bring AI to China.
It looks like it's going to be a while until Apple rebounds from its troubles in China.
The tech giant missed analyst estimates for its sales in Greater China — a key region for Apple, particularly for iPhone sales — during its fiscal fourth quarter, which it reported Thursday.
Overall, Apple reported strong iPhone demand for this past quarter. It also rolled out its highly-anticipated Apple Intelligence software in the US in English on Monday. Some analysts have said this could drive consumers to trade up to new iPhones — like the iPhone 16 models — that can support the technology, though it remains to be seen how much that'll happen in the current period.
While consumers may be buying the newest iPhones in Greater China, they'll have to wait until April for Apple Intelligence to launch in Chinese, however.
Meantime, Apple is facing competition from local smartphone makers like Huawei and Xiaomi in the country.
Apple is reportedly in talks with Chinese tech giants, like Baidu, to bring their AI power to iPhones in a partnership not unlike the one it's struck with OpenAI. All GenAI models must be vetted and approved by regulators in China.
Apple will also roll out more AI features around April, CEO Tim Cook said on Thursday's earnings call. So far, the company has introduced a limited number of functions.
"Apple is prioritizing execution over speed — a strategy that could prove to be either prudent or potentially costly depending on how quickly competitors advance their AI capabilities," analyst Jacob Bourne at EMARKETER, a sister company to Business Insider, said.
Wedbush Securities analysts, who have an "outperform" rating on the stock, said the China region "should now be on a pace to show high single-digit growth and potentially double-digit as the iPhone 16 cycle plays out in this core region and AI likely hits in April."
However, competition is stiff, and Apple Intelligence still needs time to prove itself. It'll take months to know for certain if AI can move the needle for Apple in Greater China.