China’s Devalued Currency Could Make iPhones Even More Expensive in the Country
Apple may be forced to increase the price of its iPhones in China due to a weaker yuan, analysts speaking with the Wall Street Journal say. As you may already know, China has made in interesting move: It devalued its currency on Tuesday.
As a result, Apple will be tempted to “pass the burden to Chinese consumers”, which means the already expensive handset will become even more expensive. That, of course, will have an impact on iPhone sales, as it could mean weaker demand.
“China’s sudden devaluation confirmed market concerns over China’s economic growth. We expect weaker consumer demand for iPhones in China and Apple may raise its product prices later if China continues to devalue its currency,” said Fubon analyst Arthur Liao.
Fact is, Apple warned investors last year that a strengthening dollar could bite into sales and gross margins as expressed in US dollars.
As for its Chinese suppliers, such as Foxconn, a weaker yuan could be helpful; it pays the bills in the Chinese currency, so a devalued yuan wouldn’t have a significant impact on earnings.
Apple is betting big on the Chinese market: The company already has 19 stores and is expanding quickly. As Apple took Chinese tastes into consideration when designing its products, the popularity of the latest models is undeniable: It has become the most popular smartphone, and we’ve seen how heavily Greater China has contributed to Apple’s revenue in recent quarters.