Apple CEO Tim Cook said the company is working hard to meet the demand for its flagship iPhone X smartphone in an interview with CNBC’s Josh Lipton and Jim Cramer after the company’s earnings report on Thursday.

What we can say, and you can see that from our quotes, is we were quickly backlogged, to say the least. Now, however, as I mentioned, the ramp is going better, and we’re hoping to decrease those quotes in the next day or two — some. Now, there will still be a wait, but we’re working as hard as we can to get as many out there as soon as possible. We know that a lot of people want these in time for the holidays, and so you can bet that we’re trying to do that. Cook also talked up the growth of its wearables business.

An Apple representative said that between 200 and 500 people were waiting in line in front of some of the first Apple Stores where the iPhone X on sale Friday, including stores in Australia, Singapore and Japan.

Cook also noted that the company’s wearable devices business is going strong.

“The wearables business, which is largely the Watch and AirPods, are now the size of a Fortune 400 company and really coming out of nowhere if you really think about when we started this business,” Cook said.

No. 400 on the Fortune 500 list is Calpine, which had $6.7 billion in annual revenue, according to Fortune. Separately, investor and former Apple analyst Gene Munster estimated that the Watch alone makes up about 3 percent of Apple’s revenue, or about $7 billion a year.

Here’s the full transcript.

Tim Cook: We just finished a spectacular year, fiscal year 2017, and we had a strong end to it. We had record Q4 revenues of $52.6 billion, which was above the high end of our guidance and up 12 percent year on year. It’s the fourth consecutive quarter that we’ve had accelerating revenues.

Geographically, Americas, Europe and the rest of Asia Pac all hit record revenues for Q4, for the September quarter, and we’ve returned to growth in greater China from strong iPhone, Mac and iPad unit and market share gains.

If you look at products, we shipped almost 47 million iPhones, which was more than we had expected, and we saw double-digit iPhone gains in a number of emerging markets, like the Middle East, central and Eastern Europe, India, Mexico, mainland China — yeah, I can’t forget that one — which we’re very proud of.

Also, I should’ve said earlier our total revenue in India doubled year on year, and so that the initiative on India really has a lot of traction.

From a services point of view, we had all-time quarterly results of $8.5 billion in revenue, up 34 percent year on year. The App Store hit another record, Apple Music also had a spectacular quarter, and if you look at our total paid subscriptions, which includes the Apple-branded and third-party branded services we now hold 210 million subscriptions, putting us among the top subscription holders in the world. That’s up 25 million in just the last 90 days.

The Mac had its best year ever in 2017, and its best Q4 ever, as we ended the year. Our product line that we refreshed in June, particularly the notebook line, has been very, very well received, and we picked up share again around the world.

Over 60 percent of Macs were sold to people who are new to Mac, and the largest component of that by far are switchers from Windows.

IPad also grew double digits for the quarter, and this is the second consecutive quarter of iPad growth. The new product line here has also been well received with iPad Pro and iPad and iOS 11, which added a number of productivity kinds of things, multitasking, drag and drop, Files, etc., to the iPad experience.

The Apple Watch was up over 50 percent in units for the third consecutive quarter, so the momentum here continues, and we couldn’t be more excited about the Series 3 and how it’s being received and sort of the cellular function that is clearly a game changer for the Watch.

The wearables business, which is largely the Watch and AirPods, are now the size of a Fortune 400 company, and really coming out of nowhere, if you really think about when we started this business.

From a new product point of view, iPhone 8 and 8 Plus, when we started shipping those, they instantly became the top two selling iPhones in our line and have continued to be every week since the launch.

IPhone X, from an order point of view, is off to a very strong start from both the direct orders and the orders that our channel partners, primarily carriers, place on us. The manufacturing ramp, which I know has been the subject to much discussion, is going well. Our output is increasing every week, and I think it’s going particularly well considering that it’s the most advanced iPhone we’ve ever made, and it has a number of new technologies in it.

The first stores open in about one hour from now in Australia and that’s sort of the firing gun for sales to begin for November 3, and we could not be more excited about it. The place is really buzzing about that.

Our revenue guidance is very strong, it’s $84-87 billion, and keep in mind that the quarter that we’re comparing against had 14 weeks in it versus this quarter has 13 in it, so you have to add 8 points to sort of normalize it to get a normalized growth rate, so you would come out then at the low end we’re accelerating again on revenue growth. Let’s see. I think that’s it. Any questions?

Josh Lipton: Regarding the iPhone X, Tim, we know the delivery window got pushed out very quickly.

Cook: Yeah.

Lipton: Is demand for that phone above what you’ve seen in previous years? Because I know Apple said it was off the charts, which to me sounds like you’re saying higher than ever. Is that the right way to think about it?

Cook: There’s nothing to compare it to is the real answer to that, because it has no predecessor product. It’s not replacing something that existed, and so there’s not a compare other than a compare to sort of our forecast internally, and so in some ways I’m not sure if any language I’ve put on it is terribly meaningful for you.

What we can say, and you can see that from our quotes, is we were quickly backlogged, to say the least. Now, however, as I mentioned, the ramp is going better, and we’re hoping to decrease those quotes in the next day or two — some. Now, there will still be a wait, but we’re working as hard as we can to get as many out there as soon as possible. We know that a lot of people want these in time for the holidays, and so you can bet that we’re trying to do that.

Lipton: To the ramp, Tim, as you mentioned, there were a lot of rumors of productions problems with the X given as you said all the new technology in this phone. Is that just for your noise, or were there any more production challenges that with previous models?

Cook: We knew that this was going to be a challenging product. It’s challenging because it’s so advanced and because it sets the roadmap for the next decade, we knew it would be challenging. From my point of view — I’ve been through lots of iPhones and lots of ramps as well — the way I would really describe it is it’s going well. And we’re happy with where we are and what you want to see in a ramp is every week you’re doing better, and that’s what I see. And so a lot of the noise in the system sometimes cannot be accurate, as you probably know.

Lipton: And do you expect the iPhone X to come into supply-demand bounds within roughly another quarter as other models have?

Cook: I don’t know is the answer to that. I don’t know. And so we’ll see. This one is harder to read. What I mean by that is we have three iPhones for the first time, we have a staggered launch for the first time. And so there’s a number of things we’ve never experienced before. We put our best judgment in the guidance that we’re going to provide in an hour or so — the $84 to $87. And we’ll see how we do. But we believe it’s going to be our best quarter ever.

Lipton: And how does the iPhone X demand in China look relative to previous models that were priced lower? Would you say demand for the iPhone X in China is off the charts too? Is that how you’d describe it?

Cook: We haven’t started selling in China yet. So we start in a few hours, I guess, so we’ll start getting a read. China takes indications of interest. That’s my word for it — versus a hard pre-order. In general, the channels sell the vast majority of the units. And so the indications of interest are really good.

Lipton: Two more questions, Tim. The fight with Qualcomm continues. We got news today, Qualcomm is suing Apple, alleging breach of contract, trying to help rival Intel. There are also these reports that Apple has now designed devices for 2018 that don’t use Qualcomm components. Is that accurate, Tim?

Cook: On the second one, I wouldn’t comment on it because it’s a new product thing and we just do not comment on new products, as you know. On sort of the lawsuit, the macro lawsuits, there’s lawsuits going back and forth. If you back up and look at this, what is happening is that the KFTC has found Qualcomm guilty and fined them in the past few weeks. The Taiwan justice department has found Qualcomm guilty and fined them. The U.S. FTC sued them and has a suit going on. The EU is investigating them. And so I think it’s pretty clear that there are problems there. What do you think?

Lipton: We talk a lot about how much Qualcomm needs Apple. But doesn’t Apple need Qualcomm if it wants to keep selling top-of-the-line devices in the future?

Cook: No. No.

Lipton: Fair enough. A final question. House Republicans unveiled their plan to overhaul the tax code today. It includes lowering the corporate tax rate to 20 percent. You suggested to Lester Holt that the tax reform could encourage Apple to hire more people. When you think about that, Tim, how many more people, and what kinds of jobs do you have in mind?

Cook: Well, what I believe is that on a more macro basis, I think it’s great for the U.S. economy to have tax reform. There are two things going on today. One is U.S. domicile companies pay a lot domestically. Secondly, if you are multinational and you have earnings, you make money offshore, which more and more people will over time. The only way to bring that back to the U.S. and invest in the U.S. is to pay 40 percent on it. And people aren’t going to do that. And so I think that you wind up having a huge investment in the United States by passing tax reform. Will we do more in the U.S.? Yes, we’ve been doing more in the U.S., right? We’re putting up a data center up in Iowa. We’re out training people in community colleges to learn to code. We hired 10,000 people or so in the U.S. last year. We just put another huge store in Chicago and continuing to expand our footprint.

Lipton: So what you’re saying, Tim, is you don’t know if you’ll come into supply and demand balance with the X within roughly a quarter?

Cook: I don’t know.

Lipton: There are some who say listen, if that delay is too long, then there’s the risk of some consumers saying, You know what, I’m going to go with what I can get my hands on — the 8, the 7, switch to a rival or just wait for the new phone to roll out? What’s your answer to that?

Cook: I want people to buy what they want. And so if they want to buy an 8 or an 8 Plus or a 7 or a 7 Plus, then I’m good with that. I want them to be an Apple customer. And we want to earn that, so we want to sell them what they want, and if they want an X, I can tell you we’re working just as hard as we can to make as many as we can as fast as we can. It’s just hard to say with certainty when supply hits demand. This is something, again — we’re in uncharted territory in terms of three phones, staggered launch — and releasing it halfway through the quarter, basically. We’re five weeks into a 13-week quarter already. However, look at the guidance. The guidance is unbelievably strong. We’re talking about our best quarter ever. And we’re talking about the low end of the guidance I think the growth rate is 7 percent, and that’s 7 compared to 14 weeks, so it’s really 15. And so that’s pretty good.

Jim Cramer: I just wanted to get some color on China because it’s a very big deal to be able to say you’re taking share. A year ago we were worried about China. It sounds like something’s happened to make it so that China is terrific. I’d love to be able to tell that story.

Cook: The real story that’s happening there is that it’s broad-based. That it’s the iPad doing well — that’s China responding to our new lineup on iPad. The Mac is doing well — that’s China responding to our new Mac lineup. Services are really doing well. That’s the ecosystem being stronger and stronger particularly on iOS. So that’s iPad and iPhone. IPhone had a great quarter in China, the best for quite some time from a year on year point of view.

Our initiative from a market point of view to focus on tier 2 cities is paying off. Before we were focused on major Tier 1 cities. We’ve put quite an effort in over time to focus more on Tier 2. And we saw really nice growth in Tier 2 cities last quarter. The other thing that’s happened — currency which happened to be a big drag in China, was only a 1 point drag last quarter, so some of that headwind has subsided.

And then secondly, and this is also very important, is if you remember, I talked about Hong Kong until you were probably sick of hearing me talk about it. Hong Kong was still a headwind last quarter but much much, much less than it has been. And that’s not necessarily because Hong Kong is doing a lot better, it’s because we’re comping now to a weaker Hong Kong number. And so you’ve got the Hong Kong improving on a relative basis, but more importantly, all of the products, which is our lifeline, are being received very well in China. We’re thrilled on getting the iPhone X in there. Which is about to happen.

Cramer: Some people are saying, Oh, wait, a second, the 8, X– I’m really confused. How could Apple be doing well if they’ve got two out there. It sounds like from this number that it’s a great strategy. I’m trying to figure out how you knew it’d be a great strategy, and why it’s working.

Cook: Well, if we could do anything we wanted to, we would have obviously shipped 8, 8 Plus and X on the same day. But we felt like the most important thing for us to do was to announce them on the same day so we wouldn’t have customers buy an 8 and then we announce the X and ship it and they go, Oh, you hosed me, I would’ve bought a X. So we announced all of those. Obviously there are some people over time that delay to play with all three before they decide. A fair number have decided I want the X and they’re waiting for the X. But that’s the reason that we did the stagger. It wasn’t a marketing thing. It was we weren’t ready to ship — we were still working on it. We accelerated the date at which we were initially planning to do iPhone X. And that’s how we got here and we’re going to learn a lot.

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