'Stock Surge' Apple, How Did It Achieve Record-Breaking Earnings?

Stock Price Soars 7% After Solid Earnings Report
Relatively Smooth Semiconductor Supply Environment
Impact of Increased Paid Service Subscribers

Apple "Possible Earnings Growth This Year Compared to Last Year"

[Asia Economy Reporter Minji Lee] Amid the overall correction in technology sector stock prices due to interest rate hike concerns, Apple has recorded its highest-ever earnings. The securities industry expects Apple to deliver solid results this year as well, driven by increased iPhone shipments and service revenue growth.

According to the financial investment industry on the 30th, Apple's stock price stands at $170.33. After the earnings announcement, the stock price showed a significant upward trend, surging 7% in just one day on the 28th.

Apple posted revenue and operating profit of $123.95 billion and $41.49 billion respectively in the fourth quarter of last year. These figures exceeded market expectations by 11.2% and 23.7%, marking the highest quarterly revenue in Apple's history. Despite concerns that hardware sales might fall short of market expectations due to production disruptions caused by parts shortages, iPhone sales reached a record high of $71.63 billion. Success with the iPhone 13 series in the underperforming Chinese market helped expand the iOS ecosystem.

The tech sector faced production difficulties last year due to semiconductor supply shortages. Apple also struggled to produce as many products as customers wanted due to parts supply disruptions. Nevertheless, increased sales of premium products likely contributed to solid earnings. Jongwook Lee, a researcher at Samsung Securities, said, “Since COVID-19, Apple has been expanding the sales proportion of premium segments in IT products,” adding, “Along with OLED TVs, gaming PCs, and foldable smartphones, the iPhone and MacBook are becoming symbols of the premium era.”

There is also an opinion that semiconductor suppliers actively prioritized production for Apple products. At a time when supply chain issues are the biggest concern for tech companies, this likely served as a differentiating factor. Researcher Lee stated, “TSMC’s high 5nm wafer share symbolizes supply priority,” and analyzed, “From the semiconductor companies’ perspective, receiving large volume orders for high-end semiconductors as a single product and being able to reflect technology upgrades in price increases means they cannot refuse Apple.”

The steady increase in paid service subscribers also had a significant impact. In addition to hardware sales, Apple’s service revenue reached $19.5 billion, setting a new record. The researcher explained, “Apple’s paid subscriber count grew from 745 million in the previous quarter to 785 million,” and added, “With over 1.8 billion active devices and more than 1.2 billion iOS active users rising about 7% annually, these are the sources of service revenue growth.” Unlike Netflix, which faces fierce competition among OTT providers to secure subscribers, hardware leverage is the core of Apple’s service revenue.

Apple did not provide guidance this time either but indicated that growth compared to the same period last year is possible. Although parts supply issues remain, they are expected to ease compared to the previous quarter. Chulhee Cho, a researcher at Korea Investment & Securities, explained, “The launch of the iPhone 12 in 2020 was delayed compared to usual years, deferring the peak season effect, so the revenue base is high,” adding, “Nevertheless, strong demand for the iPhone 13 and stable demand growth across various product lines including Macs equipped with the M1 chip will drive earnings growth.”

The estimated iPhone shipment volume for this year is expected to increase by 6.7% to 250 million units compared to last year. Both new and replacement iPhone customers are increasing simultaneously, and a low-priced model is expected to be released for the first time in two years in the first half. Additionally, service revenue, which has a high operating profit margin, is rapidly increasing, and Apple aims to expand the iOS ecosystem long-term through applications such as AR, VR, and Apple Car. Researcher Cho said, “The virtuous cycle of expanding the iOS ecosystem and increasing service revenue will continue steadily,” and explained, “Despite uncertain domestic and international environments, we maintain a positive view on Apple, which consistently increases revenue and has a bright mid-to-long-term outlook.”

This content was produced with the assistance of AI translation services.