Chinese iPhone decline slowed in April, buoyed by local smartphone demand

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in iPhone
The decline of Chinese iPhone sales slowed in the month of April, UBS said in a Friday investor memo, but that may have been because of improvements in overall smartphone demand in the country.

iPhone XR


Government smartphone data indicates iPhone sales fell 3% year-over-year in April, a substantial improvement versus the 61% recorded in March, wrote analyst Timothy Arcuri. He linked the change to "overall market strength," pointing out that Chinese smartphone sales rose 6% during the month after declines in 9 out of 10 prior months. Month-to-month the market still did better than Apple, advancing 29% against Apple's 19%.

"This is consistent with CEO [Tim Cook] commentary on the earnings call and partially the driver for slightly better revenue guidance," he continued, while warning Apple may have lost further marketshare.

China remains an important revenue driver for Apple, even if it slipped to 16.6% of total revenue in the first half of the company's fiscal 2019, down from 20 percent in fiscal 2018. Equivalent profit figures went from 22% to 19%.

"China obviously remains very important to Apple and will likely be a drag to overall growth in F19, but we think this is reflected in our revenue estimate of down 2.6% in F19," said Arcuri. UBS is issuing Apple stock a "buy" rating with a $235 price target.

The company faces potential tariffs in the ongoing U.S.-China trade war. If those do take effect Apple could decide to raise already high iPhone prices, at least until it can move manufacturing outside of China. That, however, might take several years to get up to scale.

Comments

  • Reply 1 of 2
    LatkoLatko Posts: 382member
    I don’t see any adaptation by Apple to the elementary Chinese local/cultural usage patterns (especially weibo, wechat etc.) that would make its proposition more valuable vs. the Chinese competition than it was, feature-wise. Price-wise iPhones like any other US products will not get a better positioning with the resumption of the trade-war, so what’s the optimism in this article based upon ? Is there any relevant measure that Cook is taking or will take (or is he just sitting his time out) ? Framing a smaller downfall as “an improvement” - which I rather consider a slow but persistent race to the bottom - says enough about the competitive perspective...
    edited May 10
  • Reply 2 of 2
    sacto joesacto joe Posts: 734member
    Latko said:
    I don’t see any adaptation by Apple to the elementary Chinese local/cultural usage patterns (especially weibo, wechat etc.) that would make its proposition more valuable vs. the Chinese competition than it was, feature-wise. Price-wise iPhones like any other US products will not get a better positioning with the resumption of the trade-war, so what’s the optimism in this article based upon ? Is there any relevant measure that Cook is taking or will take (or is he just sitting his time out) ? Framing a smaller downfall as “an improvement” - which I rather consider a slow but persistent race to the bottom - says enough about the competitive perspective...
    What you’re missing is installed base. Folks who buy into the Apple ecosystem stay with the Apple ecosystem. Not sure how big the installed base is in China, but we can get an idea from the <11 million batteries that Apple replaced leading into the end of December via their $29 special sale - approximately 10 times what Apple was expecting from what I’ve read.

    BTW, I trust UBS and their ilk about as far as I can throw Donald Trump (which is farther than most folks but still not very far)....
    edited May 10
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