Apple reported a decline in iPhone sales across nearly all global markets, except for Europe, in its latest quarterly results.

The tech giant disclosed that demand for its smartphones dropped by over 10% in the first quarter of this year, with decreases seen in every region except Europe. Overall, Apple’s revenues dipped by 4% to $90.8 billion, the largest decline in over a year. However, the results surpassed expectations, leading to an increase in Apple’s share price during after-hours trading in New York.

Apple attributed the downturn to Covid-related supply disruptions, which resulted in unusually high sales during the same period last year. The company assured investors of a return to growth in the upcoming months, citing forthcoming product launches and investments in artificial intelligence (AI).

In the crucial Greater China market, iPhone sales fell by 8%. Apple CEO Tim Cook sought to reassure investors about the company’s prospects in China, highlighting increased iPhone sales in mainland China despite the overall decline.

The competition in China has intensified, primarily from domestic brands like Huawei. According to Gil Luria, a senior software analyst at DA Davidson, although Huawei performs well due to its local brand identity, iPhone maintains an advantage in terms of features, functionality, and prestige.

Despite Apple’s struggles, the broader smartphone market experienced growth, with global shipments rising by 10% in the first quarter, as per research firm Canalys. Luria noted that Apple’s challenge lies in introducing significant improvements to its handsets, with the last notable upgrade seen in the iPhone 12, launched almost four years ago.

Looking ahead, Apple is banking on the introduction of new AI features in the upcoming iPhone 16, slated for later this year, to drive a significant upgrade cycle.