Apple reported a drop in iPhone sales and revenue $6 billion below Wall Street expectations due to challenges in its China business. Despite beating analysts’ targets for fiscal first-quarter sales and profit, the company saw a 3% decline in after-hours trade. The results confirmed concerns about the iPhone losing ground in the competitive Asian market. Apple CEO Tim Cook acknowledged the mid-single digits drop in iPhone sales in China and highlighted the increasing competition from Huawei and foldable phones. The company’s sales in China for the December quarter missed analyst estimates, and revenue for the current quarter is expected to be $5 billion less than the previous year. Meanwhile, Apple’s services business experienced the biggest growth during the fiscal first quarter, while Mac and iPad sales were in line with analyst expectations. Despite these challenges, Cook highlighted strong double-digit growth in iPhone sales in emerging markets outside of China, and mentioned the “huge opportunity” in generative AI. Apple also faced challenges in the App Store in Europe and legal disputes with medical device maker Masimo over the Apple Watch.