Hong Kong - China shipments of smartphones from Apple, Microsoft and other makers that don’t use the Android operating system rose by about 33 percent in the final quarter of last year, according to government and analyst data, indicating strong sales for the iPhone in its largest market outside the US.
About 24.32 million smartphones not powered by Google’s software shipped within China between October and December, according to data provided by the China Academy of Telecommunication Research, a research arm of the Ministry of Industry and Information Technology. That total, the vast majority of which would be comprised of iPhones, increased by a third from the same period a year earlier, Marbridge Consulting said in an email.
Expectations that iPhone sales are faring worse than anticipated have depressed shares of Apple and its main rivals and suppliers, including Samsung Electronics and Hon Hai Precision Industry. Samsung last week reported fourth-quarter earnings below analysts’ estimates, the latest sign the global smartphone market is running out of steam as markets mature and China’s economy decelerates.
“In hindsight, 2015 was a depressing year for tech hardware,” HSBC Global Research analysts Steven Pelayo and Lionel Lin wrote in a January 12 report. “Weak end demand resulted in excess supply across the supply chain, leading to a focus on purging excess inventories for much of the year.”
Pivotal component
China is an increasingly critical component of Apple’s business, helping it sell a record 13 million iPhones during the September debut-weekend of its latest handsets. Apple doubled its revenue from the country for the quarter ended September to $12.5 billion.
Yet demand there is dwindling after years of scorching growth: smartphone shipments in China were on pace to grow about 1 percent last year after increasing 20 percent in 2014 and 64 percent in 2013, according to IDC. Domestic brands Xiaomi and Huawei Technologies are moving into the mid- and high-end segments, challenging Apple and Samsung for market share.
Apple shares finished below $100 for the first time in over a year on January 8 after analysts, including UBS and RBC Capital Markets, lowered their estimates for iPhone sales. Apple, which gets the majority of its revenue from the iPhone, reports financial results for the holiday quarter on January 26. The Cupertino, California-based company is predicting record revenue in part because of strong Chinese demand.
BLOOMBERG