Beijing, China (BBN)-Shares in Apple were down on Wednesday following the announcement by China's central bank that it was devaluing the yuan, sparking concern that the US technology giant would see revenues fall in one of its most important markets.
Apple shares fell 5.2 per cent in trading on Tuesday after the People's Bank of China pushed the yuan down nearly 2 per cent through a sharply weaker guidance rate, reports the South China Morning Post.
Greater China- which includes the mainland, Hong Kong and Taiwan- is Apple's second-largest market, with net sales of US$13.2 billion in the quarter ending June 2015, up 112 per cent on the same period last year.
Arthur Liao, an analyst with Taiwan's Fubon Bank, said Apple may pass the fall in revenue in US dollar terms onto mainland Chinese consumers.
“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,” Liao said.
Apple addressed the potential risk of a stronger US dollar against the yuan in its most recent annual report in September 2014.
"There is a risk that the company will have to adjust local currency product pricing due to competitive pressures when there have been significant volatility in foreign currency exchange rates," the company said.
In April, Apple said sales of the iPhone in China in the first quarter of this year had overtaken US sales for the first time.
During a recent visit to the country, Apple chief executive Tim Cook told news portal QQ that he predicted China would become the firm's largest market within the next two years.
Apple's devices are among the most expensive smartphones on the market in China.
The iPhone retails for around 1,000 yuan (US$155) more in mainland China than in the US and Hong Kong.
The US firm has faced increasing competition from Chinese smartphone makers, particularly Xiaomi, which recently overtook Apple to become the country's top brand, though this may change with the release of the latest iPhone, expected in September.
BBN/SK/AD