Apple's rush to exit China sends iPhone sales tumbling

“Half the decline is due to a change in channel inventory…” CEP Tim Cook said. That's code for we're Getting the hell out of Dodge...

Update: Last week, in the lead up to Apple’s earnings report, I warned the company was over-exposed to China and geopolitical tensions surrounding Taiwan.

Apple’s numbers are now in, and my suspicions proved to be right as execs bent over backwards to dodge questions about its reliance on China for production and revenue.

These were the headline numbers in US$:

 Q4 revenue was $124.3 billion, up four per cent QoQ.

 iPhone was $69 billion, but China sales fell 11 per cent.

 New Macs saw that division rise 15 per cent to $9 billion.

 And new iPads also saw $8 billion, plus 15 per cent.

 Wearables (Apple Watch, AirPods, Video Pro) fell two per cent to $11.7 billion.

 The standout was Services, the division that contains iCloud, AppleTV+ and the app store. It boomed to $26 billion, up 14 per cent.

 Apple now has an active user base of 2.35 billion devices, and billion paying subs in AppleTV+, iCloud and app store.

 The high-volume low-cost subs business took Apple to its highest profit margin on record, at 46.9 per cent - proving once again that audience is the most valuable asset.

But… China.

Headlines focused on slowing iPhone sales, but the real story came from Tim Cook afterwards.

He told CNBC that half of the decline in China was due to a change in “channel inventory”.

“If you look at the negative 11 (per cent), half of the decline is due to a change in channel inventory…” he said.

This is growing pains as it shifts production out of China and into India and other countries.

This is the real job facing Cook - shifting his supply line reliance from China to India and other countries - to fall into line with the White House’s America First policy.

Here’s the deep dive…