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China is becoming Apple's most important market

China is becoming Apple's most important market


The country is the key to the iPhone's long-term growth

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Apple may bring in the bulk of its revenue in The Americas, but China — now Apple's second largest market — is quickly turning into its most crucial one. Apple has just released its earnings for the fourth quarter of 2015, and revenue from China has grown to $12.5 billion, up from $5.7 billion year-over-year, a 99 percent jump.

After not including China in the initial launch countries for the iPhone 6 last year, Apple managed to ship the iPhone 6S and iPhone 6S Plus on day one, and the results were immediately clear. Apple sold 13 million iPhones on its opening weekend, beating the record 10 million iPhones sold a year earlier. Beating the record was essentially a given — the record has fallen every year — but a 30 percent jump on an "S" year and after a super-cycle upgrade year in 2014 shows just how much impact China can and will continue to have on Apple's bottom line.

China is the key to sustaining the iPhone's remarkable growth

For years, analysts have been concerned about Apple being unable to keep up its record-breaking iPhone sales, which have been largely dominated by The Americas and Europe. But with it's rapidly growing middle class, Chinese carriers continued investment into LTE penetration — which is at 10 percent and growing — and Apple's continued retail expansion in the country, China is becoming the key to sustaining the iPhone's remarkable growth.

Apple brought in $58.7 billion in revenue in China alone in fiscal 2015, a 96 percent increase from $29.8 billion in fiscal 2014. Given the fact that just about half of China's population has reliable access to the internet, the potential for sustained long-term iPhone growth lies directly within China's borders.

Apple China

It's not all roses for Apple in China though. While growth is still moving upward, it has slowed a bit, coming down from the massive 157 percent growth in the first quarter of this year. Apple has to deal with the volatile renminbi, which sent stock markets on a roller-coaster ride this summer after the currency was devalued by China. With an increased dependence on the Chinese market, Apple is more exposed to feeling the effects of the Chinese governments manipulation of its currency.

While The Americas should continue to be Apple's biggest market for the next couple years, China's ascension shows no signs of slowing down as of yet. Soon the world's biggest country will be the most vital market for the world's largest company.

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