Apple's China IPhone Shipments Jump 40% Following Discounts

Talk to me about the China data, because it's official data that we kind of crunch the numbers on, and I'm trying to extrapolate a story out of it. Is this a recovery? The story definitely is a recovery, right? And the first couple months of 2024, you saw iPhone shipments declined quite significantly in China. But you know around the springtime, some interesting things happen. Apple started offering some promotions on some of the higher end iPhone models. Some of the resellers and online sales channels for the iPhone started offering discounts there. They have several different holidays, shopping holidays in China that offer discounts not only on the iPhone, but several different products. And So what you've seen here is an uptick in sales and based on our calculations. Based on the data that comes officially from China, you saw 40% growth in the last month or so. And so that's quite significant for Apple. And the smartphone market is growing quite strongly in China right now. It's not just Apple, it's Huawei, some of the other Chinese phone makers. But you know, China was a real concern for investors in Apple earlier this year and last year. And with the sales uptick, a lot of those concerns are being mitigated. And this is happening at a really great time for Apple because the summers are usually slow season for iPhone sales given the anticipation. Of the new models to come in September. So what you're seeing right now is a strong uptick in the current iPhones in the months leading up to the next iPhones and then you're gonna get another big push come September, October when the new iPhones roll out. So right now things in China for Apple in terms of the iPhone they're they're as good as they've been in several months. Mark, can we talk a little bit about the big picture strategy in China? You reported, for example? June 21st that Apple was halting its AI rollout in Europe because it was concerned about the regulatory environment there. By comparison, do we have a good sense of what the AI rollout will be in China and and whether it will just mirror what they plan to do in the United States? So as you know, there's three facets to Apple intelligence. There's an on device large language model, right? For some of the more minor tasks like notification prioritization. There's a cloud component which is also run through Apple for more advanced things like writing tools and summarizing information. And then the third part is the chat bot. That's the whiz bang feature that is going to be most exciting to a lot of people. And in the US, you get open AI as a partner, but in China, you're going to need another partner. So they've talked to Alibaba, they've talked to Baidu, they've talked to some others, but they don't have an agreement in place there. And until they're able to get an agreement for that third party chaplain integration, they're not really going to be able to roll out Apple Intelligence in a meaningful way. I would expect that to come together sometime by the middle of next year.