Over the past year, Apple (NASDAQ:AAPL) has been facing headwinds in one of its most important markets, Greater China. Rising trade tensions have spurred a sense of economic nationalism that has resulted in many Chinese consumers vowing to boycott the company's products in favor of devices made by Chinese rivals like Huawei. For Apple, China is no longer the growth market it used to be.

The new iPhone 11 appears to be selling well. Could the device help drive a comeback in the Middle Kingdom?

Customer at an Apple Store during the iPhone 11 launch

iPhone 11 launched last month. Image source: Apple.

Demand in China is better than expected

Wedbush analyst Daniel Ives released a research note last week, outlining better-than-expected demand in China for the iPhone 11. "We believe China demand is tracking roughly 15%-20% above expectations on iPhone 11 thus far and will continue to be a major driver of strength over the coming quarters," he wrote in a note to investors following a trip to Asia to conduct channel checks with suppliers. Meanwhile, Ives believes that the iPhone 11 Pro is enjoying strong demand in the U.S.

There are an estimated 60 million to 70 million iPhone owners in China that are ripe for upgrades, according to Ives, who also downplayed concerns that President Trump's ongoing trade war with China would weigh on iPhone unit sales. 

Apple's business in China has been recovering following a series of steps implemented earlier this year. Greater China revenue returned to growth in the second quarter on a constant currency basis. (As reported, Greater China sales fell 4%.)

Chart showing Apple's Greater China revenue over time

Greater China revenue isn't growing like it used to. Data source: SEC filings. Chart by author. Calendar quarters shown.

Thanks to strong demand, Apple could sell around 185 million iPhones in fiscal 2020, according to the analyst's models. That's ahead of Wall Street's current consensus estimate that calls for 140 million in iPhone unit sales in fiscal 2020. The company just kicked off its new fiscal year on Sept. 29, a few days after the iPhone 11 and 11 Pro went on sale.

Ives also goes as far as to predict that Apple will unveil four new flagship devices next year, a departure from recent years. Apple has released three new models per year since 2017. All 2020 models are expected to include 5G support and a rear-facing 3D-sensing camera system.

The analyst remains bullish on Apple's services expansion, with Apple Arcade launching last month and Apple TV+ just around the corner. Earlier this year, Wedbush forecast that Apple would be able to garner 100 million subscribers for first-party services within a few years. At last count, the tech titan had 420 million paid subscriptions, including first-party and third-party offerings.

Wedbush reiterated its outperform rating and $265 price target on Apple shares.