Mobile

Apple's latest numbers show a huge slowdown in China

Following a 33 percent drop in revenue, China is no longer Apple's second biggest market.

Sarah Tew/CNET

Apple's latest numbers are in -- and while the company was quick to celebrate selling a billion iPhones, a closer look reveals a troubling trend for one of the company's most important markets: China.

Sales in the Greater China region (the mainland, Taiwan and Hong Kong) plummeted 33 percent year over year to $8.8 billion for the quarter that ended in June. Apple's revenue for its fiscal third quarter was $13.23 billion for the Greater China region.

That was Apple's worst regional drop among its markets. China, which for some time has been Apple's second largest market after the US, is now its third largest market, with Europe taking second place.

Apple did not immediately respond to a request for comment.

A potential reason for the drop is heat from competitors. Chinese phone makers like Huawei, Oppo and Xiaomi have traditionally focused on low-end to midtier devices for budget-conscious China, but have now started moving to the high-end segment. Xiaomi's Mi 5 and Huawei's P9, for instance, are meant to compete with flagships from Apple and Samsung. In fact, many Chinese smartphone makers are one-upping Apple by releasing phones with features that the iPhone maker has yet to capitalize on, such as USB-C support, Dual LED flash and OLED displays.

But it's not like Apple isn't trying. There were several not-too-subtle hints that it wants a bigger slice of China during the company's big developer conference in June. Apple has also invested $1 billion in Didi Chuxing, China's Uber, possibly part of an attempt to butter up the Chinese government, which can be harsh on foreign businesses.