Greater China Earned Apple $35.3B at the Lowest Margin of 5

Apple’s Greater China segment earned $35.326 billion of operating income in fiscal 2026, up 31.2% from $26.917 billion, according to the segment note in the 10-K Apple filed on 3 November. On $82.378 billion of net sales, that is a segment operating margin of 42.9%, the lowest of Apple’s five regions, by our arithmetic.

From fiscal 2015 to fiscal 2023, Greater China had the second-highest margin of the five every year, behind only Japan, by our arithmetic. The other four regions combined reached 44.7% in fiscal 2026, against 34.8% in fiscal 2015, our arithmetic from Apple’s 10-Ks.

Business Pill · Gross Margin

An evergreen Business Engineer explainer on gross margin, what a company keeps from each dollar of sales. It teaches the general idea only and does not discuss Apple’s results.

Go deeper: how Greater China ties into Apple as a market, a segment margin and a supply base: How Apple’s China Exposure Works: 17% of Sales, 42.9% Margin.

What the 10-K Segment Note Shows

In fiscal 2026 the segment margins were 47.4% for Japan, 46.1% for Rest of Asia Pacific, 45.5% for Europe, 43.4% for the Americas and 42.9% for Greater China, by our arithmetic. Apple says segment operating income “consists of net sales to third parties, related cost of sales, and operating expenses directly attributable to the segment”; research and development and general and administrative costs sit in a separate Corporate column.

Greater China supplied $8.409 billion of the $36.791 billion increase in segment operating income, or 22.9%, by our arithmetic. As we reported on 2 November, the region supplied 29% of Apple’s fiscal 2026 revenue growth.

Of each extra dollar of Greater China net sales in fiscal 2026, 46.7 cents became segment operating income, by our arithmetic, above the region’s full-year margin. The region’s margin rose to 42.9% from 41.8% in fiscal 2025, while the other four rose faster, to 44.7% from 42.3%.

Twelve Years of Segment Margins

Greater China’s margin was 39.2% in fiscal 2015, 37.2% in fiscal 2019 and 42.0% in fiscal 2022, by our arithmetic from the 10-Ks of fiscal 2017, 2020, 2023 and 2026. In fiscal 2024 it slipped to 40.4%, just under the Americas at 40.5%, and ranked fifth for the first time in the twelve years we read.

Its fiscal 2026 operating income of $35.326 billion was the highest of the twelve years and 13.4% above the $31.153 billion of fiscal 2022. Greater China was 17.2% of Apple’s net sales and 16.6% of its segment operating income in fiscal 2026, by our arithmetic.

What the Filing Says About the Mix

The 10-K says the mix of revenue was “generally consistent for each reportable segment” “except in Greater China, where iPhone revenue represented a moderately higher proportion of net sales”. A sentence the fiscal 2025 10-K did not have adds: “In addition, in 2026, Services revenue represented a moderately lower proportion of net sales in Greater China”.

The segment table also gives cost of sales by region. Greater China’s fiscal 2026 gross margin was 46.1%, up from 45.4% and the lowest of the five regions, against 48.8% to 50.8% for the others, by our arithmetic. Its selling and marketing spend was 3.3% of net sales, also the lowest, our arithmetic.

Apple wrote that Greater China net sales rose “primarily due to higher net sales of iPhone and Mac”, and that “The strength in the renminbi relative to the U.S. dollar had a favorable year-over-year impact on Greater China net sales during 2026”.

Where the Hardware Is Made

Apple says that “Substantially all of the Company’s hardware products are manufactured by outsourcing partners that are located primarily in China mainland, India, Japan, South Korea, Taiwan and Vietnam”.

Its own long-lived assets in China, which Apple defines to include Hong Kong and Taiwan, were $13.268 billion at the end of fiscal 2018, 32.1% of the total. By the end of fiscal 2025 they were $3.617 billion, 7.3% of the total and 72.7% lower, by our arithmetic. The fiscal 2026 10-K table lists only the U.S. and Other countries, with no China row.

What the Risk Factors Say

Apple rewrote a risk factor that read “Future operating results depend upon the Company’s ability to obtain components in sufficient quantities on commercially reasonable terms” now reads “Future operating results depend upon the Company’s ability to obtain components, compute capacity and storage resources in sufficient quantities and on commercially reasonable terms”. By our count it grew to 652 words from 279. We covered the filing’s risk list in Apple filing adds compute to third-party risk list, now 9.

How Each Side Reads These Figures

For readers who see strength, Greater China delivered a twelve-year high in segment operating income, up 31.2%, with its margin up 1.1 points, by our arithmetic.

For readers who see pressure, it now earns the lowest margin of Apple’s five regions, with the lowest gross margin, and Apple says its mix leans more to iPhone and, in 2026, less to Services. We cite no analysts’ views here.

Connecting the Coverage

This follows our 2 November piece, Greater China drove 29% of Apple’s FY2026 revenue growth. We also reported Apple’s hardware drove 70% of its $38.4B gross profit gain, Apple’s 10-K shows $117B in purchase commitments, up 65% and Apple brings 18 AI features to China with Alibaba’s Qwen.

The Structural Read

As we read the segment note, the region grew its profit and its margin, but the other four regions combined grew their margin faster, to 44.7% from 42.3%: Greater China fell below them in fiscal 2024, and the gap widened to 1.8 points in fiscal 2026, by our arithmetic.

As we read the filing, the two explanations Apple gives sit in the revenue note rather than the segment table: a mix with a moderately higher share of iPhone and, in 2026, a moderately lower share of Services in Greater China.

Three Implications

FOR APPLE INVESTORS Greater China supplied 22.9% of the increase in Apple’s segment operating income in fiscal 2026, against 29% of its revenue growth, by our arithmetic from the 10-K.

FOR THE SERVICES BUSINESS Apple says Services was a moderately lower proportion of Greater China net sales in 2026; the 10-K gives no Services figure by region.

FOR THE SUPPLY CHAIN Apple’s long-lived assets in China were $3.617 billion at the end of fiscal 2025, down from $13.268 billion at the end of fiscal 2018, and the fiscal 2026 10-K shows no China row.

The Business Engineer Lens

This story maps onto the Business Engineer framework AI’s Geopolitical Chokepoint.

The framework opens its argument with: “The digital economy rests on a physical foundation that most people in that economy never see.”

As we read it, Apple’s 10-K shows both sides of that foundation in one region: Greater China is a market that earned $35.326 billion of segment operating income, and China mainland is the first location Apple lists for the outsourcing partners that make substantially all of its hardware. The framework, published in December 2025, does not discuss Apple.

Related coverage: Apple’s 10-K Filing Warns AI Agents May Resist Instructions

What Is Not Established

Segment operating income excludes research and development and corporate costs, so it is not the profit Apple earns in the region after all costs. The 10-K does not give product or Services revenue by segment, so the effect of the mix can be described only in Apple’s words, “moderately”.

The fiscal 2026 10-K does not give a China figure for long-lived assets, so the year-end 2026 amount is not established here. The tables give long-lived assets by country without saying what those assets are or where in the supply chain they sit. Each year’s figures come from the latest 10-K that reports it; where the filings we read overlap, the figures match. We did not contact Apple.

The Bottom Line

Greater China earned Apple $35.326 billion of segment operating income in fiscal 2026, the highest in twelve years, at a 42.9% margin that was the lowest of its five regions, by our arithmetic from the 10-K. It supplied 29% of Apple’s revenue growth and 22.9% of its segment profit growth.

What happened next (4 Nov): Greater China’s $82.4 billion in fiscal 2026 was 40.3% above fiscal 2015, yet its share of Apple’s net sales fell to 17.2% from 25.1% as the rest of Apple grew 126.5%, by our arithmetic from 12 years of 10-K segment tables: Greater China Grew 40% Since 2015 Yet Fell to 17% of Apple.