iPhone Demand Soars... Apple Sets Revenue Record and Acquires Israeli AI Startup

Strategy to Strengthen Wearable AI Competitiveness
Record-High Sales from October to December Last Year

Apple achieved record-breaking sales in the first quarter of its current fiscal year (revenue from October to December last year). The surge in demand for iPhones led to an earnings surprise. Apple is also set to acquire an Israeli artificial intelligence (AI) technology company. With this move, the company aims to narrow the AI technology gap with other big tech firms such as Meta and Google, and is expected to accelerate the development of AI-powered wearable devices.

Citizens are viewing Apple's new product, the iPhone 17 series, at the Apple Myeongdong Store in Jung-gu, Seoul, on September 19 last year, the official release date. Photo by Yonhap News

On January 29 (local time), Apple announced that its first-quarter revenue reached $143.76 billion (approximately 206.2813 trillion won), marking a 16% increase compared to the same period last year. In the previous quarter, which had set the previous record for quarterly revenue, Apple posted $102.5 billion. The market forecast compiled by research firm LSEG was $138.48 billion. By segment, iPhone sales saw a significant increase, reaching $85.269 billion, up 23.3% year-on-year. iPad and Mac sales reached $8.595 billion and $8.386 billion, respectively.

During a conference call, Apple CEO Tim Cook stated, "We achieved the highest quarterly performance in our history," adding, "iPhone delivered its best results ever, driven by unprecedented demand, and set all-time records in every region." He further explained that "the number of active Apple devices worldwide has increased from 2 billion to 2.5 billion."

Apple projected that second-quarter (January to March) revenue would increase by 13% to 16% compared to this quarter, exceeding Wall Street's expectation of 10%. However, CEO Cook noted, "We are witnessing rising prices in the memory market," and added, "While the impact was minimal last quarter, we expect it to have a greater effect on gross margin this quarter."

Apple is also expanding its investments in the AI sector. According to major foreign media outlets, Apple recently acquired Israeli audio-related AI startup Q.AI for $2 billion. This marks Apple's second-largest acquisition since it bought Beats for $3 billion in 2014.

Founded in 2022 in Tel Aviv, Israel, Q.AI specializes in improving audio quality in environments with whispering voices or significant background noise. The company is developing technology that can be applied to headphones or smart glasses, enabling communication without speaking aloud by detecting subtle facial movements. Once this technology is launched, users wearing Apple headphones or smart glasses will be able to engage in non-verbal conversations with an AI assistant. Johny Srouji, Apple's Senior Vice President of Hardware Technologies, described Q.AI as "a remarkable company pioneering new and creative ways to use imaging and machine learning."

Recently, Silicon Valley companies in the United States have been actively developing AI-based wearable devices. Meta has launched Ray-Ban-branded smart glasses that allow users to converse with AI. Google and Snap are preparing to release smart glasses later this year. OpenAI acquired IO, a startup founded by renowned former Apple designer Jony Ive, last year and is reportedly developing a compact device capable of interacting with ChatGPT.

This acquisition is unusual for Apple, which has typically preferred to acquire talent or intellectual property (IP) from smaller startups rather than pursue large-scale acquisitions. Notably, Apple has previously acquired companies in the semiconductor sector. In 2011, it acquired Israeli flash memory company Anobit; in 2018, Dialog Semiconductor; and in 2019, Intel's smartphone modem business unit.