Why Apple’s not decoupling from China

Apple has opened a new research and development (R&D) center in Shenzhen, the iPhone maker’s latest bid to counter a resurgent Huawei and bolster its position in the world’s largest smartphone market. It is Apple’s fifth product R&D facility in China.

The move shows Apple continues to prioritize shareholder interests above the din of anti-China US politicians. At the same time, it has undercut speculation Apple is quitting China for India when in actuality, it is merely adding India to its list of important markets and production sites while also bolstering its presence in China.

Greater China is Apple’s third-largest regional market after the Americas and Europe, but its sales there have recently slipped amid orders to ban iPhone usage in certain government and state firm offices. In the nine months to June 29, 2024, Greater China accounted for 17.5% of Apple’s total sales, down from 19.6% a year earlier.

Apple’s Greater China sales by volume were down 9.7% year-on-year, while its total sales increased by 0.8% over the same nine-month period. In the third quarter alone, Apple reported a 6.5% year-on-year decline in sales by volume in Greater China, compared with a 4.9% increase in total sales.

The decline coincided with state directives ordering government agency and state-owned enterprise (SOE) staff to stop bringing iPhones and other foreign smartphones to work. As of December last year, the tech war-tinged edict extended across at least eight provinces, including prosperous coastal provinces, Bloomberg reported.

That’s seemingly given local brands a competitive boost. In August, according to Chinese consulting firm CINNO Research, the value of Huawei’s cell phone sales in China exceeded those of Apple for the first