Apple stock trading was halted on Wednesday when the company dropped its revenue expectations nearly 8 percent to $84 billion from its average guidance in November. Apple had previously said it expected $89 billion to $93 billion in sales for the holiday quarter, which ended December 29.
The company blamed “emerging market challenges” and lackluster iPhone sales. In both instances, China was a driving force behind the lower-than-expected numbers, the company said.
“We believe the economic environment in China has been further impacted by rising trade tensions with the United States,” Tim Cook wrote in a letter to investors, in a not-so-thinly-veiled stab at President Donald Trump’s trade battle with the world’s most populous country.
“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” he added. “In fact, most of our revenue shortfall to our guidance, and over 100 percent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”
Apple is also dealing with the fact that phone upgrade cycles are getting longer so people aren’t buying new phones as often. New generations of iPhones are so expensive that consumers are more likely to stick with their current phones, even if it means simply replacing a battery by “taking advantage of significantly reduced pricing for iPhone battery replacements.”
So while it may be true that Trump’s China policies are in fact doing damage to that country’s economy — and to Apple — Apple also needs a new blockbuster business if current iPhone purchasing trends continue.
This article originally appeared on Recode.net.