How much is Apple’s Greater China operation worth?

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Apple is worth a lot of money.

As of early January, it’s worth around US$2.2 trillion.

That’s more than Baidu, Alibaba, and Tencent combined. That’s also worth more than fellow US tech titans Alphabet and Facebook put together.

Apple has a huge market cap because the company is fantastically profitable and it’s able to keep many customers coming back given its strong ecosystem and brand.

Apple also returns a lot of money to shareholders. In the fiscal fourth quarter ended September 26, 2020 alone, for example, the company returned almost US$22 billion to shareholders.

In terms of how much Apple’s China operations are worth, I would say it’s worth at least US$270 billion and likely a lot more.

I get the minimum US$270 billion number by taking Apple’s market cap and multiplying by the percentage of Greater China sales versus total sales in the most recent quarter.

In terms of the fiscal fourth quarter, Greater China accounted for around 12.3% of total sales in the period, even though sales decreased 28% year over year to US$7.95 billion.

Apple’s Greater China operations are probably worth a lot more than that because CEO Tim Cook is pretty optimistic about the future in the region. He said,

“A larger percentage of China revenue is made up of new iPhones. And so that’s the reason the number for the total quarter started with a minus sign. But given what we see in the early going with the new iPhones, we’re confident we’ll grow in Q1”.

Given the 5G upgrade cycle, it’s a fair bet to say that demand for Apple iPhones could be pretty strong in China over the next few quarters.

Apple’s China operations could be worth more given that Chinese incomes will likely continue to grow rather quickly for a while more. A larger and more wealthier middle class could mean more demand for iPhones and other devices that Apple sells.

The future

It should be said that Apple’s future in Greater China isn’t set in stone. One potential factor that could affect Apple’s China business is US-China relations.

Although the average Chinese makes a lot less than the average American, there are a lot more Chinese and that’s given China more influence over the world. As a result, there is friction between the existing leader, the US, and the rising one, China.

The friction has translated into a worsening economic climate between the two countries.

Over the past few years, President Trump has levied taxes on China, and China has responded by levying taxes back. The future US President, Joe Biden, has also signaled he wants to form a more global coalition to push back on China on some issues.

If the relation between the US and China worsen substantially, I don’t know if Apple’s China operations will be as promising as it could be with better relations.

As it stands now, however, Apple’s Greater China operation is worth a lot, and there is a lot of future growth potential in the future as well.


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