Tim Cook Highlights 'Staggering' iPhone 17 Demand, Supply Constraints, and China Rebound

During today's earnings call for its record-setting first quarter, Apple CEO Tim Cook shared new details on iPhone demand, Apple's AI strategy, and a sharp rebound in China. Cook said demand during the quarter exceeded internal expectations, leaving Apple in a supply chase to meet customer demand.



The iPhone 17 lineup was the primary engine of growth, driving iPhone revenue up 23 percent year-over-year to an all-time record of $85.3 billion. Cook described customer enthusiasm for the new models as "simply staggering," noting that the iPhone 17 family is the strongest lineup the company has ever had. This demand led to very lean channel inventory exiting December, leaving the company currently supply-constrained. Cook attributed the tightness specifically to the availability of advanced manufacturing nodes required for Apple's latest silicon.


Greater China saw a significant turnaround, growing 38 percent year-over-year. Cook stated that the iPhone had record upgraders in the region and saw double-digit growth in switchers from other platforms. This performance defies recent concerns about the competitive landscape in the region. Emerging markets also remained strong, with India posting double-digit revenue growth.

In another notable disclosure, Cook confirmed that Apple is working with Google on the next generation of Apple Foundation Models. He said the collaboration will help power future Apple Intelligence features, including a more personalized version of Siri later this year. The comments follow earlier reports that Apple had selected Google's Gemini as part of its AI efforts. Cook stressed that Apple's approach remains focused on privacy, combining on-device processing with Private Cloud Compute.

Services revenue hit an all-time high of $30 billion, up 14 percent. CFO Kevan Parekh said Apple set all-time revenue records across advertising, cloud services, and payment services. The company now has more than 2.5 billion active devices in its installed base.

Mac revenue came in at $8.4 billion, down 7 percent year-over-year. Apple attributed the decline to a difficult comparison against the previous year, which saw the launch of the M4 MacBook Pro, Mac mini, and iMac. Despite the revenue dip, the company reported that the Mac install base reached an all-time high, with nearly half of the customers purchasing a Mac during the quarter being new to the product. The iPad segment returned to growth, with revenue up 6 percent following the release of the M5 iPad Pro and the A16-powered iPad.


Looking ahead to the March quarter, Apple expects total company revenue to grow between 13 and 16 percent year-over-year. Services revenue is projected to continue growing at a double-digit rate similar to the December quarter. The company expects gross margin to land between 48 and 49 percent.

Cook also highlighted the company's manufacturing progress in the United States, confirming that they are shipping servers for Apple Intelligence from a new facility in Houston ahead of schedule. This is part of the American Manufacturing Program aimed at strengthening domestic production capabilities.

You can listen to the full earnings call at the link below.

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