Will Apple’s quarterly earnings be shaken to the core as iPhone’s popularity declines in China?

Apple is expected to deliver more bad news to investors when it reports quarterly earnings on Tuesday, as recent research data suggests iPhone sales declined in the December quarter in China, with analysts unsure of a swift recovery in the near term.

Following Apple’s rare warning to investors in early January lowering its first-quarter revenue guidance, Strategy Analytics, a Boston-based research agency, confirmed that iPhone shipments had dropped by 22 per cent in China during the fourth quarter last year – the firm’s worst performance since early 2017.

Although overall Chinese smartphone shipments tumbled 11 per cent annually to reach 108 million units in the fourth quarter of 2018, Apple’s performance in China is in sharp contrast to the 23 per cent rise in Huawei Technologies' shipments and 8 per cent increase in Vivo. Oppo and Xiaomi, the other two vendors in the top five brands, reported a 2 per cent and 35 per cent decline in handset shipments for the same period.

Shares of Cupertino, California-based Apple cratered 10 per cent on January 3, a day after the company slashed revenue guidance in a rare acknowledgement of waning sales. While Apple chief executive Tim Cook blamed a weak Chinese economy for a downgrade in revenue guidance for the quarter ending December, analysts also believe he may be glossing over strategy missteps and the effects of fierce competition from fast-improving Chinese smartphone brands.

Although the fourth-quarter shipment remains poor on a year-on-year basis, Apple has already seen some improvements in iPhone sales over the previous third quarter., according to Zaker Li, a Shenzhen-based senior research analyst at IHS Markit.