China iPhone 12 cycle 12% weaker than iPhone X was, analyst claims

Posted:
in AAPL Investors edited June 18
Amid a dip in the Chinese smartphone market, Goldman Sachs says that current iPhone shipments in China are 12% lower than the iPhone X series, bucking talk of a super cycle.

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


In a note to investors seen by AppleInsider, analyst Rod Hall analyzes the latest China smartphone shipment data for the month of May, which was recently released by the state-run China Academy of Information and Communications Technology (CAICT).

Total handset units during the period clocked in at 23 million units, down 32% year-over-year. Hall points out that this appears to be the lowest shipment numbers for China since at least May 2014.

Hall also says that re-opening "seems to have pulled demand forward quite a bit out of April and May," but that the impact appears to have been short-lived. He suggests that China's re-opening story could be a blueprint for how other countries fare when they re-open.

On the iPhone specifically, there were 3.8 million international smartphone shipments in China during May. That mostly consists of iPhone units. Hall says that that's up from 2.8 million units in May 2020, but is generally in-line with trends from prior years.

The September-to-May aggregate unit count comes in at 38 million units, which compares favorably to the 31 million units for the same period in 2018 to 2019, and 2019 to 2020.

However, the analyst says that the 2021 numbers are still down 12% compared to the iPhone X redesign cycle. Hall takes this as evidence that the current iPhone 12 redesign cycle is "materially weaker" than the last one. He says this supports Goldman Sachs' hypothesis that a three-year cadence for the iPhone will see lower peak unit shipments as global penetration reaches a peak.

"It is now difficult to dispute the lack of an iPhone Super Cycle in China with aggregate units down materially over the iPhone X redesign," Hall writes. "This data also challenges the assumption that global iPhone replacement cycles have stabilized as it clearly implies lengthening replacements in China."

Hall is the second analyst to draw conclusions from the May CAICT data. On Thursday, JP Morgan took the same numbers as an indication that Apple was gaining market share in the declining Chinese smartphone market compared to domestic vendors.

The Goldman Sachs analyst maintains his 12-month Apple price target of $130, which is based on a 27x multiple applied to his earnings-per-share forecast. Historically, Hall has had the lowest price targets among Apple analysts.

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Comments

  • Reply 1 of 13
    p-dogp-dog Posts: 84member
    I wouldn’t put any stock into what this guy at Goldman Sachs says. He has been consistently wrong for years now concerning Apple’s financial situation. How does he keep his job?
    Beats
  • Reply 2 of 13
    genovellegenovelle Posts: 1,221member
    Sounds odd since they are gaining market share. Their market must be contracting year over year. 
    Beatstmay
  • Reply 3 of 13
    lkrupplkrupp Posts: 9,270member
    Once I saw the name ‘Rod Hall’ I stopped reading. Remember, this is the Goldman Sachs analyst who predicted a massive drop in AAPL (down to like $85) when every other analyst was saying the opposite. Looks like he’s still clinging to his shorting narrative.
    edited June 18 Beats
  • Reply 4 of 13
    GeorgeBMacGeorgeBMac Posts: 9,774member
    That makes sense:  The iPhone X was a major redesign that added significant functionality to the phone.   The biggest attraction of the iPhone 12 was the addition of 5G.   But China has already been there.  They've had it, so Apple simply added itself to list of available 5G phones.  Unless a person was locked into Apple, there was no big deal about one more vendor adding 5G.
  • Reply 5 of 13
    BeatsBeats Posts: 2,408member
    That makes sense:  The iPhone X was a major redesign that added significant functionality to the phone.   The biggest attraction of the iPhone 12 was the addition of 5G.   But China has already been there.  They've had it, so Apple simply added itself to list of available 5G phones.  Unless a person was locked into Apple, there was no big deal about one more vendor adding 5G.

    But iPhone didn’t have 5G.
    Alex_V
  • Reply 6 of 13
    yojimbo007yojimbo007 Posts: 1,134member
    Speculation based on guesstimates…
     
    lkrupp
  • Reply 7 of 13
    GeorgeBMacGeorgeBMac Posts: 9,774member
    Beats said:
    That makes sense:  The iPhone X was a major redesign that added significant functionality to the phone.   The biggest attraction of the iPhone 12 was the addition of 5G.   But China has already been there.  They've had it, so Apple simply added itself to list of available 5G phones.  Unless a person was locked into Apple, there was no big deal about one more vendor adding 5G.

    But iPhone didn’t have 5G.

    True, the iPhone X didn't.   There was no 5G back then.
  • Reply 8 of 13
    BeatsBeats Posts: 2,408member
    Beats said:
    That makes sense:  The iPhone X was a major redesign that added significant functionality to the phone.   The biggest attraction of the iPhone 12 was the addition of 5G.   But China has already been there.  They've had it, so Apple simply added itself to list of available 5G phones.  Unless a person was locked into Apple, there was no big deal about one more vendor adding 5G.

    But iPhone didn’t have 5G.

    True, the iPhone X didn't.   There was no 5G back then.

    Which would explain an iPhone 12 sales spike. Especially in China where they actually seem to care about 5G. If there wasn’t a spike we could assume the people who would wait for a 5G iPhone switched to a 5G android instead. That doesn’t seem right.

    A more logical assumption is iPhone 12 being the first 5G iPhone saw a sales spike pushed by iPhone 5G holdouts. I believe this reason would only create a supercycle in China and not anywhere else.

    In short, I don’t think iPhone 12’s 5G is a “meh” update because androids had it first.
  • Reply 9 of 13
    BeatsBeats Posts: 2,408member
    Speculation based on guesstimates…
     
    Yet another(though more reliable) article claims iPhone has the most share of 5G in China. Can both be true? If so, then the smartphone decline is much much worse than we thought.

    This article just doesn’t make sense. 
  • Reply 10 of 13
    GeorgeBMacGeorgeBMac Posts: 9,774member
    Beats said:
    Beats said:
    That makes sense:  The iPhone X was a major redesign that added significant functionality to the phone.   The biggest attraction of the iPhone 12 was the addition of 5G.   But China has already been there.  They've had it, so Apple simply added itself to list of available 5G phones.  Unless a person was locked into Apple, there was no big deal about one more vendor adding 5G.

    But iPhone didn’t have 5G.

    True, the iPhone X didn't.   There was no 5G back then.

    Which would explain an iPhone 12 sales spike. Especially in China where they actually seem to care about 5G. If there wasn’t a spike we could assume the people who would wait for a 5G iPhone switched to a 5G android instead. That doesn’t seem right.

    A more logical assumption is iPhone 12 being the first 5G iPhone saw a sales spike pushed by iPhone 5G holdouts. I believe this reason would only create a supercycle in China and not anywhere else.

    In short, I don’t think iPhone 12’s 5G is a “meh” update because androids had it first.

    Yet the point of the article was that, in China, the sales spike of the iPhone X was greater than that of the iPhone 12.   And it also mentioned that smart phone sales were down by a third year on year and the lowest since 2014 [despite China's strong recovery].

    It is why I think 5G on the iPhone worked the opposite in China as it did here:  China had had 5G and 5G smart phones had become a necessity in China (unlike in the U.S. where its still being rolled out).

    It's strictly an interpretation of those stats, but to me they seem to say that Apple timed it right in the U.S. but was late to the game in China where the 5G (r)evolution had already taken place. 
  • Reply 11 of 13
    BeatsBeats Posts: 2,408member
    Beats said:
    Beats said:
    That makes sense:  The iPhone X was a major redesign that added significant functionality to the phone.   The biggest attraction of the iPhone 12 was the addition of 5G.   But China has already been there.  They've had it, so Apple simply added itself to list of available 5G phones.  Unless a person was locked into Apple, there was no big deal about one more vendor adding 5G.

    But iPhone didn’t have 5G.

    True, the iPhone X didn't.   There was no 5G back then.

    Which would explain an iPhone 12 sales spike. Especially in China where they actually seem to care about 5G. If there wasn’t a spike we could assume the people who would wait for a 5G iPhone switched to a 5G android instead. That doesn’t seem right.

    A more logical assumption is iPhone 12 being the first 5G iPhone saw a sales spike pushed by iPhone 5G holdouts. I believe this reason would only create a supercycle in China and not anywhere else.

    In short, I don’t think iPhone 12’s 5G is a “meh” update because androids had it first.

    Yet the point of the article was that, in China, the sales spike of the iPhone X was greater than that of the iPhone 12.   And it also mentioned that smart phone sales were down by a third year on year and the lowest since 2014 [despite China's strong recovery].

    It is why I think 5G on the iPhone worked the opposite in China as it did here:  China had had 5G and 5G smart phones had become a necessity in China (unlike in the U.S. where its still being rolled out).

    It's strictly an interpretation of those stats, but to me they seem to say that Apple timed it right in the U.S. but was late to the game in China where the 5G (r)evolution had already taken place. 

    I doubt so many people with those iPhone X and others with XS/11 didn’t upgrade to the first 5G iPhone.

    Then you have an article claiming Apple is #1 in 5G marketshare which makes more sense.

    With 5G being fairly new technology and little use cases, I don’t see everyone jumping on board which would explain low smartphone sales 3 years in a row(during the 5G revolution). 

    I see iPhone 12 selling more than 11 and XS but maybe not more than X. It’s also too early to tell.
  • Reply 12 of 13
    seymourseymour Posts: 5member
    If analysts were correct most of the time, there would be a lot more billionaires in the world. 
    lkrupp
  • Reply 13 of 13
    GeorgeBMacGeorgeBMac Posts: 9,774member
    Beats said:
    Beats said:
    Beats said:
    That makes sense:  The iPhone X was a major redesign that added significant functionality to the phone.   The biggest attraction of the iPhone 12 was the addition of 5G.   But China has already been there.  They've had it, so Apple simply added itself to list of available 5G phones.  Unless a person was locked into Apple, there was no big deal about one more vendor adding 5G.

    But iPhone didn’t have 5G.

    True, the iPhone X didn't.   There was no 5G back then.

    Which would explain an iPhone 12 sales spike. Especially in China where they actually seem to care about 5G. If there wasn’t a spike we could assume the people who would wait for a 5G iPhone switched to a 5G android instead. That doesn’t seem right.

    A more logical assumption is iPhone 12 being the first 5G iPhone saw a sales spike pushed by iPhone 5G holdouts. I believe this reason would only create a supercycle in China and not anywhere else.

    In short, I don’t think iPhone 12’s 5G is a “meh” update because androids had it first.

    Yet the point of the article was that, in China, the sales spike of the iPhone X was greater than that of the iPhone 12.   And it also mentioned that smart phone sales were down by a third year on year and the lowest since 2014 [despite China's strong recovery].

    It is why I think 5G on the iPhone worked the opposite in China as it did here:  China had had 5G and 5G smart phones had become a necessity in China (unlike in the U.S. where its still being rolled out).

    It's strictly an interpretation of those stats, but to me they seem to say that Apple timed it right in the U.S. but was late to the game in China where the 5G (r)evolution had already taken place. 

    I doubt so many people with those iPhone X and others with XS/11 didn’t upgrade to the first 5G iPhone.

    Then you have an article claiming Apple is #1 in 5G marketshare which makes more sense.

    With 5G being fairly new technology and little use cases, I don’t see everyone jumping on board which would explain low smartphone sales 3 years in a row(during the 5G revolution). 

    I see iPhone 12 selling more than 11 and XS but maybe not more than X. It’s also too early to tell.

    I think that's all true....   In the U.S.
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