Apple loses market share in China as iPhone shipment decline peaks

Posted:
in AAPL Investors
November was the worst month for iPhone shipment declines due to ongoing supply issues, but December showed signs of improvement, according to J.P. Morgan.

iPhone shipments in China down for November
iPhone shipments in China down for November


Supply issues in China have greatly impacted iPhone 14 Pro availability since shortly after its release in September. Shipping times have improved since then, but Apple will have a tough Q4 earnings call as a result.

According to a combined report from J.P. Morgan and China Academy of Information and Communications Technology seen by AppleInsider, shipments declined by about 58% year-over-year for November 2023. Total shipments tracked since September show a 31% decline year-over-year.

This sharp decline has impacted Apple's overall market share in China with a 2% decline. It fell to 19% for November 2023 versus 21% in November 2022.

The decline in market share wasn't so deep due to the overall smartphone market seeing a 34% decline as well. Apple's drop is a supply issue created by China's zero Covid policy and subsequent fallout at a Foxconn plant.

Units in millions. Y/Y% change. Source: CAICT and J.P. Morgan estimates.
Units in millions. Y/Y% change. Source: CAICT and J.P. Morgan estimates.


J.P. Morgan expects year-over-year shipment declines to continue into December due to supply remaining constrained for at least the first half of the month. The firm is maintaining its overweight rating on Apple stock with a price target of $190.

Read on AppleInsider

Comments

  • Reply 1 of 5
    lkrupplkrupp Posts: 10,341member
    Okay, so this article from 12/27/2022 says Apple is GAINING marketshare in China.

    https://appleinsider.com/articles/22/12/27/iphone-gains-china-market-share-in-declining-smartphone-market

    Now this article says it is losing marketshare in China less than two weeks later.

    SO WHICH THE HELL IS IT, AppleInsider?

    I swear these goddamn analysts are so full of bull excrement their eyes are dark brown and bulging out of their skulls. 
    edited January 6 watto_cobra
  • Reply 2 of 5
    Bart YBart Y Posts: 46unconfirmed, member
    lkrupp said:
    Okay, so this article from 12/27/2022 says Apple is GAINING marketshare in China.

    https://appleinsider.com/articles/22/12/27/iphone-gains-china-market-share-in-declining-smartphone-market

    Now this article says it is losing marketshare in China less than two weeks later.

    SO WHICH THE HELL IS IT, AppleInsider?

    I swear these goddamn analysts are so full of bull excrement their eyes are dark brown and bulging out of their skulls. 
    It’s relatively straightforward - the 12/27/22 report discusses JB Morgan / CAICT aggregated data for Sept. and October. 2022 data, showing the entire China smartphone market declined heavily, while Apple’s share, due to intro and good supply of iPhone 14’s of all models, declined less than the general market, thereby gaining market share in those months.  This isn’t particularly surprising as worldwide, low and midrange smartphone tiers are seeing declines and sales contractions while premium phones, and particularly iPhones saw good to great demand, probably iPhone 14 Plus excluded but more than made up by Pro & Pro Max models.

    The current article Jan 6, 2023 covers November China data only specifically.  IF Apple had full and normal Pro/Pro Max supply for China and worldwide, we would have seen more of the same, increased market share of iPhones vs entire (still shrinking) smartphone markets, and likely even to increased total iPhone shipments.  But because of the Chinese Covid shutdowns and related labor issues at the Zhengzhou Foxconn iPhone City factory, production and iPhone Pro/Pro Max supplies were rapidly depleted and constrained both for China and worldwide markets, leading to missed deliveries and lengthened delivery times.  This affected Apple’s relative market share in China leading to a slight 2% drop in market share because the rest of the China market dropped a whopping 34%, far outpacing iPhone declines.  

    As mentioned, the China market has a demand problem for Android’s low to Mid tiers (and probably premium tier too) in the face of good to too much inventory (can’t sell enough), while Apple has consistent to very good demand in China held back by supply disruption.  As many investors suggest, iPhone sales interrupted due to supply and delivery waiting tend not to be sales lost but sales delayed into next month (December assuming factory restart and ramp up to almost full capacity, which has happened) or into the Jan-Mar quarter.

    Hope this helps.


    blastdoorOfermuthuk_vanalingamwatto_cobrajas99
  • Reply 3 of 5
    blastdoorblastdoor Posts: 2,918member
    Crashing out of zero Covid with no transition plan is going to be tough for supply and demand in China. Small fluctuations in market share are basically rounding errors against that backdrop.
    watto_cobra
  • Reply 4 of 5
    Chinese health experts are predicting covid-19 infection will reach peak before Chinese New Year on 1/22. The strategy China is taking against covid-19 is a good one. Let the greatest number of people get infected as soon as possible together. Very quickly the sick people will not infected other people. Because people surrounding hime are already infected and will not get sick for at least several months. Therefore, the virus could not infected more people at this stage. Further, vast majority of people getting sick will recover within 5 to 9 days. Once recovered they become immune against covid-19 and healthy will not infect other people. 
  • Reply 5 of 5
    MadbumMadbum Posts: 436member
    Bart Y said:
    lkrupp said:
    Okay, so this article from 12/27/2022 says Apple is GAINING marketshare in China.

    https://appleinsider.com/articles/22/12/27/iphone-gains-china-market-share-in-declining-smartphone-market

    Now this article says it is losing marketshare in China less than two weeks later.

    SO WHICH THE HELL IS IT, AppleInsider?

    I swear these goddamn analysts are so full of bull excrement their eyes are dark brown and bulging out of their skulls. 
    It’s relatively straightforward - the 12/27/22 report discusses JB Morgan / CAICT aggregated data for Sept. and October. 2022 data, showing the entire China smartphone market declined heavily, while Apple’s share, due to intro and good supply of iPhone 14’s of all models, declined less than the general market, thereby gaining market share in those months.  This isn’t particularly surprising as worldwide, low and midrange smartphone tiers are seeing declines and sales contractions while premium phones, and particularly iPhones saw good to great demand, probably iPhone 14 Plus excluded but more than made up by Pro & Pro Max models.

    The current article Jan 6, 2023 covers November China data only specifically.  IF Apple had full and normal Pro/Pro Max supply for China and worldwide, we would have seen more of the same, increased market share of iPhones vs entire (still shrinking) smartphone markets, and likely even to increased total iPhone shipments.  But because of the Chinese Covid shutdowns and related labor issues at the Zhengzhou Foxconn iPhone City factory, production and iPhone Pro/Pro Max supplies were rapidly depleted and constrained both for China and worldwide markets, leading to missed deliveries and lengthened delivery times.  This affected Apple’s relative market share in China leading to a slight 2% drop in market share because the rest of the China market dropped a whopping 34%, far outpacing iPhone declines.  

    As mentioned, the China market has a demand problem for Android’s low to Mid tiers (and probably premium tier too) in the face of good to too much inventory (can’t sell enough), while Apple has consistent to very good demand in China held back by supply disruption.  As many investors suggest, iPhone sales interrupted due to supply and delivery waiting tend not to be sales lost but sales delayed into next month (December assuming factory restart and ramp up to almost full capacity, which has happened) or into the Jan-Mar quarter.

    Hope this helps.


    Good post!

    I would add also by last 10 days of December , many Apple stores had IPhone 14 pros pickup available and the carriers also had stock. They also had next day shipment on all models with $8 fee. So only delay was free shipping directly from Apple.


    So they may have sold more than people are expecting

    we will see 
    edited January 8 watto_cobra
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