Challenges in China Cast a Shadow Over Apple’s iPhone 15 Launch

By Maggie On Sep 12, 2023

Apple Inc. ( AAPL.O ) is gearing up for a highly-anticipated product launch event on Tuesday, with expectations high for the unveiling of the iPhone 15 lineup. The event comes against a backdrop of uncertainty, with questions over access to the Chinese market and intensified competition looming over the world’s most valuable publicly traded company.

Apple’s iPhone series played a key role, accounting for more than half of the company’s staggering $394.3 billion in revenue last year. But the road ahead appears to be challenging, especially in China, which ranks among Cupertino, California-based Apple’s third-largest market.

The latest iterations of Apple’s iconic smartphones are expected to introduce innovative features, including redesigned charging ports, sleek titanium cases, and advanced camera systems. The grand reveal is scheduled for 10:00 a.m. Pacific Time (1700 GMT) at the Apple Park headquarters.

However, Apple faces new challenges in China as the Chinese government recently tightened restrictions on the use of iPhones, adding an element of uncertainty to the company’s prospects in this key market.

Further complicating the situation is the resurgence of competition from Huawei Technologies ( HWT.UL ), once Apple’s main rival in China’s premium smartphone segment. Huawei’s phone business took a hit in 2019 due to US export controls, but the company bounced back with the launch of the Mate 60 Pro. The high-end device is equipped with Chinese-made chips that some US lawmakers say may have violated US trade restrictions.

Huawei is trying to get ahead of Apple with additional features such as satellite calling and relies on a Chinese government-backed network. While Apple’s current line of iPhones includes satellite capabilities for emergency situations, Huawei is pushing the boundaries of this technology.

Tuesday’s event is expected to focus primarily on Apple’s new product line. For many Apple enthusiasts, the most significant change will be the switch from Apple’s proprietary “Lightning” charging cables to the more widely used USB-C standard. This shift, which will be required by European regulations, is likely to be presented as an upgrade, using higher data transfer rates, which is especially beneficial for high-quality video transfers from iPhones.

Analysts also expect the introduction of “periscope” camera technology, potentially expanding the zoom capabilities of phones. Titanium cases and improved chips are expected to further increase the appeal of the new models. “Periscope” lenses use mirrors or prisms to extend the lens without significantly enlarging the camera module.

One of the key questions is whether these innovative features will be reserved exclusively for new high-end devices, while minor upgrades will be made to more affordable models. Ben Bajarin, managing director and principal analyst at Creative Strategies, believes that even non-enthusiasts will be drawn to the lure of the latest and greatest technology.

Apple is expected to boost its revenue by increasing the average price per phone sold. The big question, however, is whether this will be achieved through across-the-board pricing or exclusively for premium versions. The global smartphone market saw a decline, with shipments falling to 268 million from a total of 294.5 million phones in the second quarter. Still, Apple weathered the storm more gracefully than most, with shipments falling only slightly from 46.5 million phones to 45.3 million, according to Counterpoint Research.

Bob O’Donnell, head of research at TECHnalysis, is also keeping a close eye on any hints about Apple’s generative AI intentions. This technology trend underlies applications such as OpenAI’s ChatGPT and Microsoft’s “Copilot” assistive technology for Office software. While Apple has been tight-lipped about its plans in this area, CEO Tim Cook hinted in July that the company’s secretive work in this area is increasing its research spending.

As the world eagerly awaits Apple’s latest innovation, the focus is on whether the tech giant will tease an advanced form of Siri or unveil more groundbreaking news that could ignite a new wave of excitement among consumers and tech enthusiasts alike.