Apple reports first drop in quarterly revenue since early 2019, as China’s zero-COVID policy disrupted iPhone production.

Apple, the world’s biggest company in terms of market value, blamed falling sales of its flagship iPhone on production disruptions in China.

Apple’s revenue was $117.1bn for the three months that ended December, down 5.4 percent from a year ago. Profit after tax was $30bn, but both sales and profit were below analysts’ expectations.

China is the main manufacturing centre for Apple’s iPhones and the strict curbs imposed in line with Beijing’s zero-COVID policy, which left some phone-making factories locked down, seriously affected the company’s ability to deliver exports for the major year-end holiday season.

China has now relaxed the policy but anxiety over the state of the global economy remains.

Central banks in the United States and elsewhere have been raising interest rates to rein in inflation fuelled by sky-high energy prices, but consumers are also tightening their belts as the cost of living rises and wages stagnate.

With Google also disclosing a decline in October-December sales and profit, Investing.com analyst Jesse Cohen said it was clear there were “several challenges the tech sector faces amid the current economic climate of slowing growth and elevated inflation”.

Alphabet, Google’s parent company, blamed a slump in advertising sales for the disappointing performance, although, even with the decline, its profit still amounted to $13.6bn. It was only the second quarterly fall since the search engine giant went public in 2004.

“It’s clear that after a period of significant acceleration in digital spending during the pandemic, the macroeconomic climate has become more challenging,” Google CEO Sundar Pichai said in a call with analysts.

Tech companies including Google and Amazon have announced plans to fire more than 50,000 people combined in recent weeks, blaming over-hiring during the COVID pandemic when many people went online for work and entertainment.

Apple said it had no similar plans.

“We manage for the long term,” Apple CEO Tim Cook told analysts during a conference call. “We invest in innovation and people.”

Amazon, which said recently it would sack more than 18,000 staff, reported sales of $149.2bn for the three months that ended December but profits slumped to near zero from $14.32bn in the same period the year before.

“In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon,” said CEO Andy Jassy.

Investors’ disappointment at tech earnings came a day after Meta, which owns Facebook and Instagram, reported a 1 percent year-on-year drop in sales for the last three months of 2022, the first time since the company went public in 2012.

But as the social media giant announced that the number of daily users on Facebook had hit two billion for the first time, CEO and founder Mark Zuckerberg said he was upbeat about the future.

Apple also signalled rosier times ahead.

Cook indicated Apple’s supply headaches were over, saying “production is now back where we want it to be”.

In another positive sign, Apple disclosed that it now has more than 2 billion iPhones, iPads, Macs and other devices in active use for the first time. That is likely to help the company sell more digital subscriptions and advertising, helping drive long-term revenue growth.