Apple's iPhone 15 launch clouded by China problems

Apple expected to unveil new iPhone lineup amid market access concerns in China and competition from Huawei.

Chinese music producer Zhang Yadong (L) attends an event celebrating Apple's 30th anniversary in China at an Apple retail store in Beijing on August 18, 2023. (AFP)

Apple on Tuesday is expected to unveil a new iPhone 15 lineup as questions about market access in China and competition hang over the world's most valuable listed company.

The iPhone made up more than half of Apple's $394.3 billion in sales last year, but it faces new challenges with selling in China, the Cupertino, California firm's third-largest market.

Apple's latest phones are expected to have new charging ports, titanium cases and cameras, but their debut at its Apple Park headquarters at 10 a.m. PT (1700 GMT) will come as the Chinese government has expanded some restrictions on using iPhones.

Apple will also have to grapple with competition from Huawei Technologies, which was its top rival in China's premium smartphone market until U.S. export controls ruined Huawei's phone business in 2019. Last week, Huawei started selling the Mate 60 Pro, a high-end phone that uses Chinese-made chips that some U.S. lawmakers believe were manufactured in violation of U.S. trade curbs.

Huawei wants to gain an edge on Apple with add-on features like satellite calling that relies on China's government-backed network. Apple's current iPhone lineup includes satellite capabilities, though they are meant only for emergency situations.

Apple on Tuesday is likely to focus on its new product lineup. By far the biggest change for most Apple customers will be a switch from Apple's propriety "Lightning" charging cables to USB-C, a standard that Apple already uses on its laptops and some high-end iPads.

Apple was forced into the change by European regulations, but analysts believe that the company will position the change as an upgrade, taking advantage of faster data speeds that can transfer high-quality videos made with iPhones.

Analysts are also expecting a new "periscope" camera technology that could give phones better zoom capabilities and titanium cases, as well as upgraded chips. Such "periscope" lenses can use mirrors or prisms to get a longer lens without having to make the camera module much larger.

The biggest question of the day will be whether Apple reserves those features for a new top-end device and makes smaller upgrades to its cheaper models.

"Just like we saw people who aren't Ultra athletes buy the Apple Watch Ultra, we're going to see a bunch of people buy this even if they aren't camera or photography enthusiasts, just because they like the latest and greatest," said Ben Bajarin, chief executive and principal analyst of Creative Strategies. "That by itself creates that buzz and momentum and allure to the top end."

Apple is expected to increase the average price per phone sold to boost its revenue, but the question is whether it does that by raising prices across the board or just on premium versions. The global smartphone market has slumped from shipping 294.5 million total phones to 268 million in the second quarter, but Apple's shipments declined the least of any major smartphone maker, dropping from 46.5 million phones to 45.3 million, according to data from Counterpoint Research.

"The truth of the matter is, we're in a very down smartphone market," said Bob O'Donnell, head of TECHnalysis Research.

O'Donnell said he will also be on the lookout for any hints about Apple's plans with what is known as generative artificial intelligence, the technology trend behind applications like OpenAI's ChatGPT and Microsoft's "Copilot" assistant technologies for its Office software.

Analysts have repeatedly prodded Apple about its plans for such technology but the company has given few hints so far, other than Chief Executive Tim Cook's comments in July that the company's secret work on the technology is driving up its research spending.

"Will Apple tease an advanced form of Siri? That would be something that would generate some excitement," O'Donnell said.