Published in News

Qualcomm and Apple face China syndrome

by on07 July 2015


Job's Mob melt-down 

It seems that we were right, the Tame Apple Press is preparing the world for a failure in China.

For a while now Reuters has been writing stories about how terrible the figures are for Apple's Chinese rivals, this has so far included "misreading" figures .

Apple's favourite news agency Reuters ran a story saying that Apple's supplier Qualcomm is facing trouble and event mentioned that Apple's hold in China might be crumbling .

Consumer electronics giant Apple could also be vulnerable - 17 percent of the company's overall revenue last fiscal year came from China, and in the most recent quarter it sold more iPhones in the country than in the United States for the first time, Reuters wailed.

The fault is not Apples' of course but the slowing pace of China's economic growth, oh and a weakening demand for mobile devices.

Among the companies with the biggest exposure to China are Qualcomm and fellow chipmaker Broadcom which depend on China for 50 percent and 24 percent of their overall revenue, respectively and of course Apple.

Cirrus Logic which supplies integrated circuits for audio and automotive applications, reports that it made nearly 80 percent of its revenue in China last year, so it could be in trouble.

Cirrus Logic told Reuters that the number represents where its products are manufactured and not necessarily the end-market where products are sold. The company said it did not currently see any impact on its business.

Apple's involvement in China was always tentative because it never wanted to change its business model to suit the local conditions. This meant that people buying Apple gear were always going to be the extremely wealthy who liked the idea of a Western novelty, or those who aspired. This might be a big market one year, but once the novelty has worn off, such types will go for another expensive shiny thing and those who aspire are going to look for something a little cheaper.

Apple clearly sees the writing on the wall on this because it has had time to brief its fans in the Tame Apple Press. If the figures turn out bad, then it will seem that everyone is doing badly. The fact is though that cheaper Chinese products are not.

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