Apple's iPhone regained some market share in China during "618" event

Jefferies reports that Apple's iPhone sales in China surged over 40% year-over-year during the "618" e-commerce discount period, driven by price cuts and a Chinese government subsidy program. This performance is expected to boost Apple's June-quarter revenue, potentially leading to a 3%-5% iPhone revenue growth in China, contrasting with a decline in the previous quarter. The gains also increased Apple's market share in China to over 20% amid strong competition from domestic brands.

Analysis

Apple's (AAPL) iPhone sales in China experienced a significant uplift, growing over 40% year-over-year during the "618" e-commerce festival, according to Jefferies. This surge was attributed to aggressive pricing strategies, including earlier-than-usual discounts on its iPhone 16 and 16 Pro models, and a Chinese government subsidy program offering a 15% rebate on devices priced under 6,000 yuan. Consequently, Apple's market share in China has reportedly expanded to over 20%. Jefferies analysts project this strong performance could drive a 3%-5% increase in Apple's iPhone revenue in China for the June quarter, a notable turnaround from the decline observed in the country during the prior March-ended quarter. This positive outlook for China in the current quarter contrasts with expectations of flat global iPhone revenues for Apple's recently concluded second fiscal quarter. While this sales growth is a positive signal, Apple continues to navigate an intensely competitive landscape with domestic brands like Huawei and Xiaomi, against a backdrop of only marginally increased overall foreign-branded mobile phone shipments in China, which rose to 3.52 million units in April from 3.50 million a year ago. The upcoming Worldwide Developers Conference is also a key event for observing potential software innovations that could influence future product demand.

Key Decisions for Investors

• Investors should assess the potential for Apple's strong '618' sales performance in China to positively impact June-quarter earnings and help mitigate recent market share pressures in this key region.
• It is crucial to monitor the sustainability of this revived demand in China beyond the promotional period and Apple's ability to maintain its regained market share above 20% against formidable local competitors.
• Consider the upcoming Worldwide Developers Conference as a potential near-term catalyst, with software announcements likely to provide insights into Apple's innovation pipeline and future growth drivers.