Apple Inc. suffered a significant blow on Thursday as its stock price plunged by 4%, marking its worst performance since August 5. The downturn comes amid reports of declining iPhone sales in China, compounded by challenges in the artificial intelligence sector. Apple, which shipped 15% of the 284 million phones sold in China last year, saw its shipment figures drop by 17% on an annual basis, placing it third behind domestic competitors Vivo and Huawei.
The decline in Apple's market position in China has been attributed to several factors. Taiwan Semiconductor Manufacturing Company (TSMC), a key supplier for Apple, reported a nearly 6% sequential drop in smartphone sales forecast for the first quarter. TSMC cited seasonality as the primary reason for this downturn. Notably, TSMC's AI chip sector has now surpassed smartphones as its largest business segment, contributing over half of its revenue in the fourth quarter.
Industry analyst Ming-Chi Kuo predicts a further decline in iPhone shipments, expecting a 6% annual decrease in the first half of 2025. This anticipated drop is expected to be most pronounced in the second quarter, which could further impact Apple's market presence in China. Moreover, the absence of Apple Intelligence, Apple's AI system, in China is not believed to be bolstering iPhone demand, adding to the company's challenges in this critical market.
Apple's struggles are reflected in its stock performance, with shares down nearly 12% from their most recent peak in December. The company is set to report its December quarter results on January 30, an event that could provide further insight into Apple's financial health and strategic direction amidst these ongoing challenges.