Apple invests $1 billion in Didi Chuxing, Uber rival in China

The iPhone maker has been working on an autonomous vehicle and has hired hundreds of engineers.

Apple has invested $1 billion in Chinese ride-hailing service Didi Chuxing, a move seen as a clear pointer to Apple's bid to diversify business beyond the iPhone.

The announcement came ahead of Cook's upcoming travel to China, the tech pioneer's second largest market after the US. Cook said the billion dollar investment in Chinese startup is an effort to understand the Chinese market better.

"We are making the investment for a number of strategic reasons, including a chance to learn more about certain segments of the China market.,.. Of course, we believe it will deliver a strong return for our invested capital over time as well," Cook said, according to Reuters.

Didi Chuxing, the chief rival of Uber in China, said the investment by Apple was the single largest funding it has ever received.

Didi is valued at over $25 billion in China's fast-growing ride-sharing market.

Apple, which boasts of cash holdings of $233 billion, spooked investors in its latest quarterly earnings where it said net income fell to $10.5 billion from $13.6 billion in the same quarter last year.

The fiscal second quarter data on Apple's sales and revenue had also come in stark contrast to the same set of data a year ago. Between January and March 2015, Apple had sold 61 million iPhones, 10 million more than the 51 million it sold in the last quarter.

The company also disappointed investors with a lower than expected revenue forecast for third-quarter between $41 billion to $43 billion.

Apple has stayed upbeat about its China sales prospects but the current investment in a startup points to how Apple intends to chart out a path in future.

The iPhone maker has been working on an autonomous electric vehicle and has hired hundreds of automobile engineers in recent times.

In the US Apple is up against competition from Uber, General motors and Lyft in the autonomous vehicles segment.

"This investment shows they are thinking not just about cars but business models around transportation, and that is a very encouraging and interesting sign," Bob O'Donnell, an analyst with TECHnalysis Research, told Reuters.