Apple iPhone Shipments in China Surge in December



Yesterday, Chinese government data indicated that Apple’s (NASDAQ:AAPL) iPhone shipments in the country rose over 18% YoY (year-over-year) in December, reported CNBC. CAICT (the China Academy of Information and Communications Technology), a government agency, released the data. The figures indicated iPhone shipments of 3.2 million in December, against 2.7 million in the same period last year. CAICT also revealed that the overall market for smartphones in the country shrank by 13.7%, stated AppleInsider. Quoting Bloomberg, AppleInsider further noted that there were 389 million smartphones shipped in China last year. Of that total, only 13 million (3.3%) were 5G phones.

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Conflicting data about iPhone sales between September and November

Previous CAICT data, reported by Bloomberg, indicated that Apple shipped 10 million iPhones in September and October. The data showed a 6% YoY rise in iPhone shipments.

However, Credit Suisse analyst Matthew Cabral gave completely different statistics regarding iPhone sales in China. In December, Cabral revealed that iPhone shipments in China fell 35.4% YoY in November, notes AppleInsider. The drop in iPhone shipments happened despite the Chinese smartphone market expanding. According to CNBC, Cabral also estimated that Apple’s China iPhone revenue fell by over 17.5% YoY between September to November. Citing Cabral, AppleInsider stated the “lower-priced” iPhone’s popularity throughout most of China and the country’s weakening currency would add to Apple’s woes. To learn more, read Apple Revenue and iPhone Demand in China Drop.

iPhone’s Chinese woes

Apple’s flagging iPhone sales in China have challenged the company for quite some time. According to Reuters, after 2015, iPhone sales in China started stagnating. CNBC, citing a report by Canalys, reported that iPhone shipments plunged 14% YoY in the second quarter of 2019, and the iPhone’s market share slipped to 5.8% from 6.4%.

The US-China trade war, Chinese rivals, and a longer upgrade cycle for 5G are some of the reasons behind this decline. Huawei is a strong force in Chinese markets, especially after its ban in US markets. A report by IDC states that in the third quarter of 2019, the Chinese brand garnered 42% of new smartphone shipments, notes Gizmochina.

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iPhone 11 saves the day for Apple in China

In fiscal 2019’s fourth quarter, Apple’s revenue from Greater China dropped 2.4% YoY to $11.1 billion. The pace of decline slowed due to encouraging iPhone 11 shipments, though. With high-end camera features and longer battery life, the iPhone 11 series wooed Chinese consumers. In November, Gizmochina cited Canalys analyst Nicole Peng, who said, “Chinese customers seem to be receiving the iPhone 11 series better than last year’s models as a result of the lowered retail price.”

Apple CEO Tim Cook was optimistic about the iPhone 11’s performance in China. He had carefully designed the iPhone 11’s entry into China. In Apple’s Q4 fiscal 2019 earnings call, Cook said, “the things that we’ve done from a pricing and monthly payments point of view and trade-in, getting the trade-in program up and running, all of these things have had moved the dial.”

Another positive development for Apple’s iPhone business in China was its escape from another round of tariffs. The Verge reports Wedbush analyst Daniel Ives stated that the partial trade deal could save Apple $150 per iPhone. Pricing is a significant reason the iPhone 11 has gained momentum in China. Any increase in price could dent its demand there.

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Apple’s Q2 earnings to reveal more about Greater China revenue

China is preparing for the Lunar New Year on January 25, an important festival and gifting season in the country. Therefore, we can expect Apple’s iPhone demand to rise. This year, Apple is also likely to launch its 5G iPhone in September. As China is already flooded with 5G smartphones, the tech giant is faced with the uphill task of gaining ground among local competitors through its 5G iPhone. However, considering the CAICT data, 5G accounts for only 3.3% of China’s smartphone market. Therefore, it’s questionable whether 5G smartphones will be a major battleground for Apple.

The CAICT data emphasizes iPhone shipments. We don’t yet know about the iPhone’s actual sales in China. To understand Apple’s revenue from Greater China, we have to wait for the company’s fiscal 2020 Q1 results at the end of the month. Nevertheless, as most of Apple’s subscription services aren’t available in the country, it only has its hardware products to depend on there. Therefore, in China, Apple could focus on its new iPhone line up in 2020.

Apple stock climbed 2.1% to close at a new high of $309.63 yesterday. The company’s robust iPhone China shipments and App Store sales in the holiday season boosted the stock.


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