iPhone in China: Strength and Supposition
05 AUGUST 2022 - A positive prediction for iPhone in China. A piece from Apple 3.0 has Mizuho analyst Anthony Huang indicating that the strength seen for iPhone in June in the Middle Kingdom will keep on keeping on through the rest of the year.
Huang is among the analysts crediting Apple’s communicator for almost all good news for smartphones in China this summer. Citing numbers from the China Academy for Information and Communications Technology, his note says:
We believe the bulk of the y/y rebound [in June] was from iPhones while Samsung no longer commands a significant share of [China’] mobile phone market. iPhone 13 sell-through demand appeared resilient per our industry survey, as the phones continued to be in the dominant position in the high-end segment without much competition from Android camp. Superior execution along Apple supply chain and good logistics management has also prevented inventory overbuild and destocking risks.
Huang’s note also notes the lackluster performance of domestic smartphone brands. While he does expect new offerings from those through the rest of the year, orders in the supply chain don’t show them expecting much in the way of demand. The most he expects from the Chinese brands is a “moderate seasonal uptrend…” Apple, meanwhile, is expected to go as it’s been going - and it’s been going well since the last lockdowns ended in May.
What Does It Mean?!?
If you’ll permit me - I’d like to revisit an idea we hit here last week. It was then that Bloomberg ran a report saying that Apple was running a four-day sale for iPhone in China. While sales on iPhones aren’t unheard of, Apple running such a sale itself is very, very, very uncommon. Bloomberg’s assumption was that Apple was sitting on inventory that it wanted to move ahead of new product coming this fall. Now, a piece from 9 to 5 Mac seems to have decided the same thing.
Pointing to the cratering of China’s smartphone market, as well as numbers from Canalys, the headline from 9 to 5 Mac says, “Chinese smartphone shipments set to fall to 10-year low, explaining Apple discounts.” Except no it doesn’t. Not definitively. I mean, it might. Personally though, I doubt it for a few reasons:
Once the lockdowns ended, iPhone sales exploded - no discount required. There was a shopping-centric holiday in the second half of June, but when people spent they’re money, they spent it - full-price - on iPhone
The discount on Apple products referenced by 9 to 5 Mac was for four-days. If Apple really wanted to clear out inventory, wouldn’t it simply drop the price - not just drop it for a limited time?
Mizuho’s Huang credits Apple’s acumen, not a lowering of prices for preventing “inventory overbuild and destocking risks”
Finally - there’s something people keep forgetting about the four-day sale. In its report on the discount, Bloomberg said to take advantage, shoppers had to use “one of a select number of payment platforms, such as (…) Alipay.” I asked last week whether the four-day sale with the special payment requirements could be some sort of promotion for the payment methods required, not a fire sale on Apple’s part?
It makes sense that the initial thought would be Apple’s trying to burn through inventory. If you take a sec though, it doesn’t actually look like they’re trying to burn through inventory.
Not to me, anyway. But I could be wrong.
