The growing cost of living led to a decline in Apple’s sales by the close of 2022.
In the three months leading up to December, the iPhone giant’s sales decreased by 5% compared to the same period in 2021.
The decline was the largest since 2019 and worse than anticipated.
Many companies are warning of a sharp economic slowdown, especially in the tech sector, which boomed during the pandemic.
Apple CEO Tim Cook stated that the company was operating in a “difficult environment.”
He attributed the sales fall to supply difficulties caused by the Covid-19 outbreak in China, where the company’s phones are made, and a strong dollar, as well as broader economic malaise caused by rising prices, the war in Ukraine, and the pandemic’s lasting consequences.
“As the globe continues to face exceptional conditions, Apple is not immune,” he told investors during a conference call.
Apple stated that the fall in sales was global and affected the majority of its products.
Sales of its popular iPhones declined by more than 8%, while sales of Mac computers fell by 29%.
Profits declined 13% to $30 billion (£24 billion) as a result of the decreases.
Roger McNamee, the founding partner of Elevation Partners, stated that Apple’s supply chain in China was its greatest challenge.
Over the past year and a half, China has taken a more combative stance towards Western economies, in part due to their zero tolerance on Covid, but I believe there are also other geopolitical factors at play, and Apple, which has historically done the vast majority of its manufacturing in China, has had supply chain issues,” he said.
“Uncertainty surrounds the extent to which Apple may face demand issues. They cannot obtain all of the supplies they desire.”
Analyst at PP Foresight Paolo Pescatore stated that Apple, like many other electronics manufacturers, was trying to persuade people to upgrade given “what are regarded to be incremental improvements from earlier versions.”
He said, “More so when everyone is tightening their belts.”
According to the market research firm Canalys, the number of smartphones supplied worldwide decreased by 13% in 2014.
Apple executives anticipated that their services division, which includes Apple Pay and Apple News, will continue to drive growth, noting that there are now more than 2 billion active Apple devices worldwide.
“When we examine the behavior of our installed base, we find it to be very encouraging,” said chief financial officer Luca Maestri, while cautioning investors that the company anticipated sales to continue to decline in the coming months.
In investor updates, several major technology businesses also reported experiencing pressure.
Amazon, which has struggled to revitalize its e-commerce business, reported a 2% decline in online sales for the final three months of 2022, compared to the same period the previous year.
Overall, Amazon’s quarterly revenue increased by 9% to $149.2 billion, driven by its cloud computing business.
Profits fell sharply, from $14.3 billion a year ago to near zero, a trend that chief financial officer Brian Olsavsky warned investors would likely continue in the coming months.
In the three months leading up to December, Alphabet, the parent company of Google and YouTube, saw only a 1% increase in sales compared to the same period in 2021, as firms cut back on advertising, the company’s primary source of revenue, due to economic uncertainty.
Mr. McNamee stated that the issues facing Google and Amazon are remarkably similar.
People stayed home for both work and entertainment during the pandemic. Which was a boon for both companies as well as other web companies such as Meta. However, when we return to work, the situation has cooled down.”
