(Reuters) – Apple reported lower-than-expected iPhone sales in the latest quarter, its slowest-ever growth in shipments, as the company began to feel the effects of economic softness in the critical Chinese market.
Apple said on Tuesday it sold 74.8 million iPhones in the three months ended Dec. 26, the first full quarter of sales of the iPhone 6S and 6S Plus. The 0.4% growth in shipments was the lowest since the product was launched in 2007.
While revenue in Greater China rose 14% in the quarter, Apple is beginning to see a shift in the economy, particularly in Hong Kong, Apple Chief Financial Officer Luca Maestri told Reuters in an interview.
“As we move into the March quarter it’s becoming more apparent that there are some signs of economic softness,” Maestri said. “We are starting to see something that we have not seen before.”
Analysts have long feared that Apple’s sales in China, one of its top two markets, would falter amid a broad economic slowdown.
Apple’s iPhone shipments fell short of analyst expectations for 75.5 million, according to research firm FactSet StreetAccount.
The company’s first-quarter net profit rose 1.9% to $18.36 billion, while revenue increased 1.7% to $75.87 billion, both records for the company.
The rise in iPhone shipments was the smallest since the second fiscal quarter of 2013, when they rose 6.8%, according to data company Statista.
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Maestri attributed the lackluster revenue to foreign exchange headwinds, which he said knocked about $5 billion off the company’s revenue.
Apple’s shares (aapl) rose less than 1% in after-hours trading Tuesday to $100.50.