How Apple doubled its sales in China
Apple beats all estimates to produce stellar fiscal 1Q15 results (Part 6 of 10)
Apple’s revenues from China doubled in the last quarter
China has always been an important market for US technology companies like Qualcomm (QCOM) and Apple (AAPL). Qualcomm derives about half of its revenues from China, while Apple derived about 22% of its revenues from Greater China (China, Hong Kong, Macao, and Taiwan) in the last quarter. The revenues from Greater China for Apple increased by a year-over-year rate of 70%, while the company doubled its sales in Mainland China.
As the chart below shows, the revenue contribution from Greater China increased from 16% in fiscal 1Q14 to 22% in fiscal 1Q15. This contribution is behind the US and only slightly behind Europe. Given the growth, Greater China most likely will become the second most important market for Apple by the end of this quarter.
Apple benefits from earlier launch of iPhone 6, Plus in China
Apple launched the iPhone 6 and the iPhone Plus on October 17, 2014, a little later than expected because Chinese regulators had to scrutinize new security features on the devices. Still, this launch in China was much earlier than the launch of the iPhone 5S, which Apple released in China on December 25, 2013. Although this makes the comparison a little biased, nonetheless revenue growth of 100% in China for Apple was impressive.
Apple also likely benefited from its partnership with China Mobile (CHL) in the last quarter, which is the world’s largest telecom provider with more than 800 million subscribers. According to a report from Counterpoint, Apple is now ahead of Samsung (SSNLF) in the Chinese smartphone market, with only Xiaomi and Lenovo (LNVGY) ahead of it.
You can get diversified exposure to Apple by investing in the Technology Select Sector SPDR ETF (XLK), which has 16% weightage in Apple.
Browse this series on Market Realist:
