• Apple iPhone revenue rose ~13% YoY in March, with units up ~10%, according to Bernstein SocGen Group.
  • Growth was driven by strong demand for lower-priced models like the iPhone 17e, which boosted volumes but pressured average selling prices.
  • Despite a weak global smartphone market, Apple gained share and ranked No. 1 in unit sales for the quarter.

Apple's Quarter in Detail

Apple Inc. reported a surge in iPhone demand during its fiscal second quarter, with revenue climbing roughly 13% year-over-year and unit sales increasing about 10%, according to a note from Bernstein SocGen Group. The performance defied a sluggish global smartphone market, where many peers struggled. Apple's success was fueled by robust demand for lower-priced models, particularly the iPhone 17e, which helped the company capture additional market share but also weighed on average selling prices (ASPs).

As a result, while unit volumes soared, ASPs declined, squeezing product margins. Still, the strategy paid off: Apple claimed the top spot in global smartphone unit sales for the quarter, outpacing competitors. The growth was broad-based, with particular strength in China, India, and parts of Europe, according to people familiar with the matter.

Margin Pressure and Outlook

Analysts warn that if the mix continues to favor lower-end iPhones, Apple could see continued revenue gains but persistent margin headwinds. “The volume surge is impressive, but the ASP decline is a concern,” said an analyst who asked not to be named. “Apple is balancing market share gains against profitability.” The company's services segment, however, remains a bright spot, providing a cushion for overall margins. Apple declined to comment beyond its quarterly earnings.

Broader Market Context

The strong iPhone performance comes amid a subdued smartphone market, with global shipments declining in the quarter. Apple's ability to gain share highlights its pricing strategy's effectiveness in attracting price-sensitive consumers. Bernstein SocGen Group noted that the iPhone 17e's lower price point was a key driver, appealing to customers in emerging markets and budget-conscious buyers in developed regions.

Memory chip and semiconductor costs remain a wildcard for future margins, with any tightening potentially impacting production costs. Apple is expected to continue its dual strategy of offering premium and budget models to navigate the uncertain demand environment.

Correction: An earlier version of this article misstated the revenue growth figure. It has been updated to reflect the correct 13% YoY increase.