China to Apple is fatal.
Apple devices threatened by Chinese
Chinese took 8 of top 10 mobile phone vendors
For a long time, China has accounted for eight of the world’s top ten mobile phone manufacturers, excluding Apple and Samsung. This explains why Qualcomm’s revenue comes from China, and MediaTek’s situation is similar.
The US ban on Huawei in 2019 caused the mobile phone business of the world’s largest mobile phone manufacturer, then the world’s largest, to almost disappear the following year. However, Apple captured almost all of Huawei’s market share over the next three years, becoming the biggest beneficiary of the US ban and contributing significantly to Apple’s revenue during those three years.
However, in the past two years, as Huawei’s mobile phones have returned to the global market, Apple has plummeted from first place in China’s mobile phone market share to fourth or fifth place. The reason is self-evident. Huawei’s mobile phones are all priced high in the market, and Apple’s iPhone has been the hardest hit.
Chinese took 3 of top 5 smartwatch vendors
Huawei’s smartwatches surpassed Apple for the first time, taking the top spot in global shipments in Q2 2025. Anshika Jain, senior analyst at Counterpoint Research, stated that Huawei’s shipments grew 52% year-over-year in Q2 2025, the fastest growth among the top ten global brands, and surpassed Apple for the first time to take the top spot in global market share. Apple’s global smartwatch shipments have declined for seven consecutive quarters, relinquishing its top spot. However, thanks to the strength of its iOS ecosystem and user loyalty, Apple maintains its lead in the high-end smartwatch market.
Chinese took 3 of top 5 tablet vendors
According to a report released by Canalys, global tablet shipments reached 39 million units in Q2 2025, a 9% year-over-year increase and a 5% quarter-over-quarter increase.
Apple maintained its leading position, with global tablet shipments reaching 14.108 million units in the second quarter of 2025, a year-on-year increase of 2.4%, and a market share of 36.1%; Samsung followed closely behind with shipments of 6.656 million units, a year-on-year decrease of 1.8%, and a market share of 17.1%; Huawei, Lenovo and Xiaomi, ranked third to fifth, all achieved strong annual growth, with shipments of 3.231 million units, 3.098 million units and 3.051 million units respectively, with year-on-year increases of 29.2%, 24.7% and 42.3% respectively, and market shares of 8.3%, 7.9% and 7.8% respectively.
China was App Store’s largest revenue source
I believe most investors would be surprised to learn that China is the second largest source of revenue for Apple’s App Store, and frequently surpasses the United States to become the largest source of revenue.
More importantly, in recent years, Apple’s App Store has been declared a monopoly in countries around the world, requiring it to change its payment processing methods. This has put enormous pressure on Apple’s Services division, which accounts for 16-28% of its total revenue and is its largest source of revenue. However, China is the only country not affected by this, which has significant practical implications for Apple.
According to Statista’s 2024 data, the United States is the leading market for Apple’s App Store in-app revenue, followed by China, and Japan in third place. Historical data from App Annie (via PhoneArena) confirms that China has surpassed the United States to become the country with the highest App Store revenue.
How Important is China to Apple? Apple Can’t Do It Without China
I know many people disagree with my title, “How Important is China to Apple? Apple Can’t Do It Without China.” However, it’s a fact, and you can’t say for sure.
China Choke Apple’s Supply Chain
China has the largest number of manufacturers in Apple’s supply chain, while India and Vietnam can only perform simple assembly and cannot produce the majority of components. Furthermore, the highest-end iPhones can only be assembled and produced in China. To be more precise (and China has already begun imposing restrictions), if China simply bans the export of technicians and advanced components to India and Vietnam, Apple product assembly lines in those two countries will grind to a halt.
China accounts for 18% of Apple’s revenue
China, while accounting for 18% of Apple’s revenue, isn’t its largest market; Europe is larger. The problem is that the US and Europe are very mature markets, and even a 3-5% revenue growth is a real challenge. As long as Apple products sell well in China, their growth rates will be astonishing.
Huawei is one of the main reasons why Apple’s revenue has almost stagnated in the past three years. It is not the only reason, but it is the most obvious reason that cannot be denied.
China is the App Store’s second-largest market
China has long been the App Store’s second-largest market, and it also boasts the largest number of developers working on Apple’s platform.
In particular, Chinese games have long dominated the top-grossing mobile game charts worldwide, and gaming programs are among the top three sources of App Store commissions.
The App Store’s profit margin is significantly higher than that of hardware devices. The Services segment, to which the App Store belongs, is currently Apple’s second-largest revenue segment after the iPhone, making its importance self-evident.
Analyst Barnes estimated that the App Store’s operating profit margin was approximately 74.9% in fiscal 2018, rising to 77.8% in fiscal 2019. Other sources indicate that the App Store’s profit margin rose from 75% in 2018 to around 78% in 2019, generating approximately $22 billion in profits. Apple has denied the claim that the App Store’s profit margin is 75%, indicating that profit margins are not explicitly broken out or reported at that level.
The EU’s Digital Markets Directive has sparked scrutiny of Apple’s high-margin services revenue. It is estimated that Apple’s services revenue typically has a profit margin of around 70%, while hardware revenue has a profit margin of around 40%.
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