Apple gaining market share in a declining China smartphone market

in AAPL Investors edited June 2021
China is seeing a continuing decline in overall smartphone shipments, though it appears that Apple isn't being affected, according to JP Morgan.

Credit: Andrew O'Hara, AppleInsiderCredit: Andrew O'Hara, AppleInsider
Credit: Andrew O'Hara, AppleInsiderCredit: Andrew O'Hara, AppleInsider

In a note to investors seen by AppleInsider, JP Morgana analyst Samik Chatterjee takes a look at the most recent smartphone shipment data released by the state-run China Academy of Information and Communications Technology (CAICT). The data covers the month of May 2021.

Shipments of international devices, which mostly consists of iPhone models, rose 41% month-over-month in May to an absolute unit volume of 3.8 million. That's higher than the 30% average season uptick typically seen at this time of the year, Chatterjee says.

While international brands fared well in China, it appears that the overall smartphone market is declining. The industry saw a 16% dip between April and May.

The 3.8 million international shipments in May 2021 marked the best month for non-domestic manufacturers in China since May 2018.

"More importantly, the comparison of the trends between Apple and overall volumes indicates that Apple continues to gain market share in the region, with average share now closer to the teens relative to low-double digits a year ago - consistent with the feedback we are receiving from our channel checks, with most OEMs acknowledging that the smartphone market in China has slowed down broadly, except for in the case of Apple," Chatterjee writes.

Smartphones with 5G technology continue to account for the majority of total shipments in China. While 5G smartphones shipments declined 22% month-over-month, they make up 73% of the mix on a year-to-date basis. 5G device shipments volumes were up 7% year-over-year, which is largely in line with expectations.

Chatterjee maintains his 12-month Apple price target of $165. It's based on applying the a 30x price-to-earnings multiple on a 2022 earnings estimate of $5.61.

Shares of Apple were trading at $130.36 on Thursday morning, up 0.16% since markets opened.

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