Chongqing- On July 31 (U.S. local time), Apple Inc. reported stronger-than-expected earnings for its fiscal third quarter ending June 28, with total revenue reaching $94.04 billion, up 10% year-on-year, surpassing analysts' expectations of $89.53 billion. Net profit hit $24.43 billion, and shares rose 2.42% in after-hours trading.

"This was better than we expected," Apple CEO Tim Cook said during the earnings call. He attributed the growth to double-digit increases in revenue for iPhone, Mac, and services.

One of the most notable turnarounds came from the Greater China market, where Apple's revenue rose 4% year-over-year to $15.37 billion, marking its first quarterly growth in the region since the fourth quarter of 2023. "The subsidy does apply to some of our products, and it helps," said Cook, referencing Chinese government subsidies for certain devices.

China has earmarked 300 billion yuan ($41.8 billion) in ultra-long special treasury bonds to support a program promoting the trade-in of old consumer goods for new ones and advancing green and smart products in 2025. Under the subsidy policy, Chinese consumers are eligible for a 15% rebate on the purchase of smartphones, tablets, smartwatches, or fitness bands priced under 6,000 yuan, with a cap of 500 yuan per item.

On August 4, 2025, the starting price of the iPhone 16 at an Apple authorized store in SKLP shopping mall, Yubei District, Chongqing, was 4,999 yuan. (Photo/Zheng Ran)

According to a spokesperson from the Ministry of Commerce, as of May 31, the trade-in program had already generated over 1.1 trillion yuan in sales.

The iPhone remained Apple's top revenue earner this quarter, generating $44.58 billion in third-quarter revenue, up 13% year-on-year. According to Counterpoint Research, Apple maintained its position as the second-largest smartphone vendor globally in the second quarter of 2025, with a 4% year-on-year increase in shipments. This growth was largely driven by early demand surges in North America due to anticipated tariffs and strong performance in India and Japan.

Cook highlighted that the iPhone 16 series recorded double-digit growth compared to the iPhone 15 series. He also noted that Apple has shipped three billion iPhones since the product's launch in 2007.

In China, Apple ranked third in smartphone sales in the second quarter, according to Counterpoint's preliminary data. However, its May sales were boosted by iPhone 16 Pro and iPhone 16 Pro Max promotions. "Apple's May price adjustments were well-timed and well-received, launching just one week ahead of the 6.18 shopping festival," said Ethan Qi, senior analyst of Counterpoint Research. "6.18", referring to June 18, is China's largest mid-year shopping festival.

Shoppers inquire about products at an Apple authorized store in SKLP shopping mall, Yubei District, Chongqing, on August 4, 2025. (Photo/Zheng Ran)

IDC noted that Apple's price cuts sparked enthusiasm in the Chinese market. For example, the iPhone 16 Pro 128GB model was reduced by an additional 100 yuan compared to the previous year and qualified for national subsidies. As a result, Apple's second-quarter shipments exceeded expectations.

Zhong Xiaolei, analyst of Canalys (now part of Omdia), added that Apple has a significant advantage in terms of user stickiness. Once users enter the Apple ecosystem, getting them out is very hard. While other brands attempt to attract Apple users, they often serve as backup phones rather than replacing the primary Apple device.

Meanwhile, Huawei and Vivo led the Chinese market in the second quarter. Huawei recorded positive growth, while Vivo saw a decline. Huawei, another recipient of government subsidies, benefited from strong sales of the Nova, older Pura models, and certain Mate 70 series phones.

"Huawei is still enjoying strong loyalty from its core user base, who are upgrading to new models," said Ivan Lam, Senior Analyst at Counterpoint.

However, growth momentum appears to be slowing. Huawei's second-quarter growth rate of 12% was down from 28.5% in the first quarter and significantly lower than the high double-digit growth seen last year.

One Huawei distributor, who requested anonymity, said that while the company is overcoming chip bottlenecks, consumer caution remains. "Everyone supports Huawei and understands the challenges, but actual purchases are still uncertain," the distributor said. "However, app update frequency suggests the system transition to HarmonyOS is accelerating, and a full-function experience may not be far off."

Xiaomi, which had overtaken Huawei in the first quarter to claim the top spot, showed weaker results in the second quarter. Lam explained that demand had been pulled forward into the first quarter, new models lacked competitiveness, and Xiaomi underperformed during the 6.18 festival.

Despite Xiaomi's earlier momentum, Counterpoint's second-quarter data shows it failed to break into the top three. Nevertheless, Xiaomi reported strong performance during 6.18, claiming total sales across channels exceeded 35.5 billion yuan.

Recent figures from the China Academy of Information and Communications Technology (CAICT) indicate that in May 2025, total mobile phone shipments in China dropped 21.8% year-on-year to 23.72 million units, with 5G phones accounting for 89.3%.

Zhong said that the stimulus effect of national subsidies is weakening, with some provinces setting usage caps. "Most of the demand may have been released in the first quarter," Zhong said, predicting 2.3% annual market growth, down from earlier expectations.