Apple’s Holiday Quarter Sales Affected by AI Delays and Chinese Competition

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Apple is expected to report modest revenue growth for its holiday quarter, with challenges stemming from delayed AI features and heightened competition from Chinese smartphone makers. Analysts predict a slow quarter for the tech giant as its iPhone 16 series, which launched in September, lacked AI features that its competitors, such as Google and Samsung, had already integrated into their devices. While Apple is planning to roll out improved AI capabilities, including updates to Siri, later in the year, these delays have hindered iPhone demand during the crucial holiday-shopping season.

Apple’s struggles with AI were further underscored when the company had to retract a news-summarizing AI tool that was criticized for inaccuracies by media outlets like the BBC. Jane Hepburne Scott, an investment manager at Aegon Asset Management, emphasized that Apple’s slower adoption of AI has contributed to a decline in its competitive standing and loss of market share.

Adding to Apple’s woes is fierce competition from Chinese smartphone manufacturers, particularly Huawei. The company’s global smartphone market share dropped to 23% in the last quarter of 2024, down from nearly 25% the previous year, with an even sharper decline in China, where its share fell by 10 percentage points to 17%. While the Chinese government has been subsidizing domestic smartphone purchases, these incentives primarily target budget-friendly phones, not high-end models like the iPhone.

Despite these challenges, Apple’s services division, which has been growing steadily, is expected to post a 12.9% increase in sales. However, the overall forecast for the quarter remains underwhelming, with analysts expecting just a 3.8% revenue growth for the period, significantly below the 6.1% growth from the September quarter.

Further complicating matters for Apple is the strengthening of the U.S. dollar, which has risen nearly 8% against major currencies, potentially making it harder for Apple to surpass sales expectations in international markets.

 

ASML CEO Discusses Positive Impact of DeepSeek AI Launch on Chip Demand

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Christophe Fouquet, CEO of ASML, shared his perspective on the growing influence of AI technologies, such as China’s DeepSeek, on the global chip market. He emphasized that efficient AI models are ultimately a positive force for the semiconductor industry, countering the perception that AI spending is primarily driven by large-scale investments from tech giants like Google, Meta, and Microsoft. These companies are pouring billions into building advanced data centers, but according to Fouquet, the actual demand for chips driven by this sector remains relatively small.

Fouquet argued that the broader chip demand will come from the integration of AI into various consumer and industrial applications. He highlighted examples, such as AI-enabled phones, cars, and robotics, noting that for these products to reach mass adoption, the cost of the chips must be affordable. If the cost of chips remains high, only a small number of expensive units would be sold, limiting widespread access to AI technology.

When discussing the recent launch of DeepSeek’s AI product, which had a significant impact on tech stock prices, Fouquet remained optimistic, stating that anything that helps drive down costs is beneficial for ASML in the long run. While the potential of DeepSeek’s technology remains uncertain, he believes that cost reduction is key to enabling AI to be more accessible to a wider audience.

Analyst Sara Russo from Bernstein agreed with Fouquet’s viewpoint but noted that the effects of DeepSeek’s launch are still unfolding. She pointed out that ASML’s role as a supplier will depend on how AI applications evolve and influence chip demand, as well as the needs of chip manufacturers.

 

OpenAI Chief Sam Altman Plans Visit to India Amid Legal Challenges

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Key Points:

  • Sam Altman, the chief of Microsoft-backed OpenAI, is planning his first visit to India in two years, scheduled for February 5, according to sources.
  • The visit may include meetings with Indian government officials and is aimed at strengthening OpenAI’s presence in India, which is its second-largest market by user base after the United States.
  • Altman’s 2023 visit involved discussions with Prime Minister Narendra Modi on the role of AI in India’s tech ecosystem.
  • OpenAI faces legal challenges in India, including a copyright infringement lawsuit initiated by ANI, India’s news agency, which claims OpenAI has violated copyright laws.
  • The lawsuit has attracted support from Indian book publishers and prominent media outlets. OpenAI maintains it uses publicly available data under fair use principles and disputes Indian jurisdiction over the case.
  • The legal issues come amid growing competition from DeepSeek, a Chinese AI rival that recently surpassed ChatGPT in the Apple App Store in the United States.