Apple reported on Thursday record revenue for its first fiscal quarter, which corresponds to the fourth quarter of calendar year 2025, as strong iPhone demand and a rebound in China lifted sales.

Apple's China sales surged 38 percent from a year earlier. The number of customers upgrading to new iPhones hit a record high, while conversions from first-time users rose at a double-digit pace, Tim Cook, Apple's CEO said on the earnings call.

IDC data showed Apple shipped 16 million smartphones in China in the fourth quarter of 2025, making it the top vendor for the period, while Huawei, the Chinese technology giant, ranked first for the full year.

The Chinese smartphone market has been extremely tough in 2025. Huawei, Apple, Vivo, Xiaomi and OPPO respectively took a close share of 16.4 percent, 16.2 percent, 16.2 percent, 15.4 percent and 15.2 percent, with Apple the only non-Chinese brand among the top five, which had previously slipped out of the group in early 2024.

"iPhone had its best-ever quarter driven by unprecedented demand, with all-time records across every geographic segment," Cook said. According to the financial report, revenue of iPhone increased 23 percent year on year, accounting for 59.3 percent of Apple's total revenue.

The iPhone 17 standard model kept prices unchanged despite hardware upgrades, a move that helped drive the lineup's strong performance.

However, Apple warned that rising demand could pressure margins in the coming quarter, saying tight supply of advanced chips, along with rising memory prices, could drive up costs and weigh on gross margins.

On its AI strategy, Cook said Apple has partnered with Google to develop its foundation models, which will support future Apple intelligence services. Beyond the partnership, Apple would also continue some of its AI development independently, he added.

Apple has been seen as slower in advancing artificial intelligence features than its competitors. The company unveiled its AI platform, Apple Intelligence, in 2024, but major AI-driven upgrades to Siri have yet to be rolled out, highlighting the challenges it faces in accelerating its AI development.