Apple China iPhone downturn expected to continue throughout 2024
Apple's iPhone sales in China will probably worsen throughout 2024, according to Jefferies analysts, with a double-digit decline forecast for sales in the country.
Futian District, Shenzhen
Despite the opinion of some analysts that Apple's being "resilient" in China, the company's sales have still taken a knock. If analysts from Jefferies are to be believed, the downturn may continue further.
According to a note released by Jefferies on Sunday and seen by Bloomberg, industry checks indicate that the rest of the mobile industry grew in December, while Apple endured a sluggish start for the iPhone 15 generation. It is claimed that the slower sales has resulted in a 30% year-on-year decline for the iPhone.
This is apparently in part due to Huawei's introduction of the Mate 60 Pro and a new made-in-China chip. This is thought to have helped Huawei claim some customers it had previously lost to Apple.
In December, Jefferies says Apple saw a double-digit fall in volumes, with forecasts for a similar decline in 2024. As part of its findings, Jefferies noted the increase in discounts on Apple's smartphone range across multiple online stores, which analysts reckoned ate into the average selling price without improving sales volumes.
The Jefferies note is a continuation of opinions from most analysts that Apple's China sales could be in trouble. In October, Piper Sandler reduced its expectations for Apple's December quarter over weak iPhone demand in the country, while in November, Ming-Chi Kuo declared shipments in China declined more than expected.
November 11's Singles Day, a major sales event in China, apparently saw Apple's iPhone sales dip year-on-year by 4%, while Huawei smartphones enjoyed a 66% increase.
Read on AppleInsider
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https://www.theguardian.com/technology/2024/jan/02/asml-halts-hi-tech-chip-making-exports-to-china-reportedly-after-us-request
I'd put more on the fact that China's economy is slowing, for various reasons;
https://www.japantimes.co.jp/business/2024/01/08/economy/xi-china-economy-new-trade-war/
China is in for a rude awakening if it thinks that it will be able to "dump" excess manufacturing output in the West. Meanwhile, consumers in China are likely reducing their expenditures while they await better economic news.
Earlier projections put Mate 60 series demand at up to 17 million units.
The P70 series should be announced next month.
Volume production isn't an issue. Enough volume production is an issue.
This is crystal clear because if Huawei couldn't produce enough chipsets for the Mate 60 demand it would never have announced other models (and tablets) using the same production facilities.
The 'problem' is that even having volume capacity, demand is outstripping it at the moment.
Demand for 2024 (all Huawei phone models) is projected at 64,000,000. That is from the report cited in this article.
https://www.asiafinancial.com/apple-facing-rough-year-in-china-as-huawei-gains-market-share
Huawei is also rumoured to have put up to 10,000,000 folding phones on its list of goals:
https://www.trendforce.com/news/2024/01/05/news-huawei-issues-rush-orders-for-crucial-components-focusing-on-cis-for-foldable-phones/#:~:text=In a strong push for,million units shipped last year.
Orders for Huawei cars are currently running very high (all of them running HarmonyOS).
New agreements with automanufacturers have also been signed.
Some rumours even point to HarmonyOS overtaking iOS in China this year:
https://fortune.com/asia/2024/01/04/huawei-homegrown-os-harmonyos-second-most-used-in-china-apple-ios/
Although everything is speculation in terms of how things will play out, Apple has competition and it is very probably feeling the pinch to a degree.
Its MatePad Pro 13.2inch OLED tablet with NearLink M-pencil etc has also been very well received.
They will be able to sell to THE REST OF THE WORLD, no different than BYD and others selling EV's or exploding electric bikes.
We know Apple products always sell better than other items during periods of economic downturn since Apple consumers always seem to be a bit more insulated from bread and butter economics.
We will see on Feb 1st who is more correct here.
Why announce a slew of new products at all if you can't even satisfy demand for just one of them?
The 'volume' question was killed in October.
Prior to that (mid-summer) Qualcomm announced during an earnings call that it would see no more material revenue from Huawei.
It was clear back then that they had a plan and capacity to put the plan into action and 2024 was very much in that plan.
In fact, even before then. They announced they would be returning to the two flagship release cycle from 2023 so we got the P60 series and then the Mate 60 series.
Everything points to a P70 series next month and a Mate 70 later in the year.
In reality there are now four flagship releases per year of we include folding and flip phones.
And on top of all that, the same production facilities are producing Huawei AI chips for industry.
https://www.telecoms.com/ai/chinese-companies-reportedly-turning-to-huawei-for-ai-chips
If there is a question, it's over international releases, especially of some phones.
Most tablets and wearables, plus routers (running HarmonyOS) seem to be getting international releases. Sometimes even before the Chinese market.
and;
https://www.trendforce.com/news/2024/01/03/news-amd-eyes-cowos-like-supply-for-ai-chips-with-tsmc-full-capacity/
Good thing that Apple and Qualcomm already have orders with TSMC for current and next generations of SOC output...
How much will those orders cost and what will be passed onto consumers?
And let's not forget that this article is pointing to a report that Apple is seeing notable competition from a phone based on a far older node.
The same applies for AI.
Me, I'd rather pay a little premium to get a current generation SOC and guarantee a reasonably long life. YMMV.
I can't imagine that volume buyers of AI chips would agree that consumer preference to support the home team, Huawei, is indicative of any preference in the AI industry. If anything, it is factually correct to state that Chinese companies no longer have access to the same leading AI chips that are and will be available in the West, other than through the blackmarket, which they will happily pay almost any price for.
Sucks to be them.
Thought that I would add this as well;
https://www.bloomberg.com/news/videos/2024-01-05/huawei-teardown-shows-5nm-chip-made-in-taiwan-not-china-video
Pretty sure that is from the tail end of previous production that Huawei had with TSMC...
As is being shown with this Mate 60 series.
Don't confuse the node with what's on the SoC.
This phone has shown to have faster 5G speeds than the iPhone. It ships with NearLink. It's camera capabilities are on another level when compared to the iPhone and it has two-way voice satellite communication. Plus all the other standard features like fast charging etc.
Paying a premium won't necessarily give you an advantage. The then utra expensive iPhone X, for all its 'premiumness' wasn't able to use the following version of Apple's AR Kit which shipped the following year. Yes, YMMV. On the other hand, HarmonyOS is working fluidly on long 'discontinued' Huawei Android (EMUI) models.
"I can't imagine that volume buyers of AI chips would agree that consumer preference to support the home team, Huawei, is indicative of any preference in the AI industry. If anything, it is factually correct to state that Chinese companies no longer have access to the same leading AI chips that are and will be available in the West, other than through the blackmarket, which they will happily pay almost any price for."
Even prior to sanctions (and with unfettered access to Nvidia hardware) Huawei's Ascend line was making a splash but not only because of the hardware but because of the full stack solution. That never changed. Sanctions threw a spanner into the works more than anything as a result of having to rejig the entire production process.
In fact the big Chinese AI companies haven't completely lost access to Nvidia.
Nvidia has screamed and kicked out at the US administration so that is doesn't completely lose its Chinese customers.
It hasn't been enough and major orders have already been lost (and products deployed) to Huawei.
Nvidia's CEO is well aware of the threat posed by Huawei and seeing the company largely cut off from one of its largest markets (leaving Huawei to fill the void) obviously grates on him.
Just last month he described Huawei as a very formidable rival in AI:
https://www.bloomberg.com/news/articles/2023-12-06/nvidia-sees-huawei-as-formidable-ai-chipmaking-rival-ceo-says?embedded-checkout=true
iFlytek has partnered with Huawei to use Ascend for its Spark 4 platform.
Huawei is also pushing into the GPU space:
https://analyticsindiamag.com/nvidia-apple-have-got-a-real-competitor-now/
Nvidia may be "unhappy" about not being able to sell its leading edge GPU's and AI processors in China, but at the same time, it and AMD, as well as Apple and Qualcomm, seem to be creating substantial demand with TSMC leading edge nodes. Meanwhile, Huawei is forced to use multi patterning DUV to even achieve 7nm, a very expensive proposition, and of limited production capability. Are you confident that Huawei can actually produce both SOC's for Mate's, and AI chips in volume, because I very much doubt that.
Kind of belies your previous bloviating about the "risk" of Apple having all of its SOC production in TSMC. As I stated then, the only risk TSMC faces is an invasion of Taiwan by the PRC, something that Xi keeps threatening.
https://www.youtube.com/watch?v=qjKNkDVeCW4