Strong China sales help Apple surmount supply-chain challenges

Despite supply-chain constraints costing the company over $6 billion in revenue, iPhone maker Apple posted blockbuster results for the first quarter of its financial year.

A highlight of its performance was its sales in China, which grew 21% year-on-year to reach $25.8 billion. The firm became the No. 1 player in the Chinese market, toppling homegrown Huawei and increasing shipments by 32% to 50 million units, according to tech researcher Counterpoint.     

Apple's strong performance was also seen across other markets, with sales in the rest of Asia bringing in $9.8 billion in sales, up nearly 20%, and more mature markets of Americas and Europe growing by 11% and 9%, respectively. Japan was the lone under-performer, with sales falling 14% to just over $7 billion. 

“This quarter’s record results were made possible by our most innovative lineup of products and services ever,” said Tim Cook, Apple’s CEO in a media statement. “We are gratified to see the response from customers around the world at a time when staying connected has never been more important."

"The product-side revenue was $104.4 billion, up 9% over a year ago," Apple's CFO, Luca Maestri, told analysts in a post-results call. "Despite significant supply constraints, we grew in each of our product categories except iPad, where supply constraints were particularly pronounced, and set all-time records for iPhone, Mac and wearable and home accessories.

These strong numbers helped Apple post revenues of $123.9 billion for the quarter, 11% up from a year ago, even as net profit climbed 20% to 34.6 billion for this period. The iPhone continued to be the biggest revenue contributor, earning 58% of overall revenue in the last quarter, an increase of nearly 10%.

However, standout growth came from Apple's services business, including digital advertising and the app store, which grew 24% to $19.5 billion, and its reported margins were double that of its products unit. Mac sales which grew 25% to nearly $11 billion. "For Mac, revenue of $10.9 billion was an all-time record," Maestri noted. "Our momentum in this category is very impressive, as the last six quarters have been the best six quarters ever for Mac." 

Apple posted "all-time records for cloud services, for music, video, advertising," he added. In the lasT year, the company added 165 million subscribers to its services business, to total 785 million at the end of the quarter.