Rod Hall: Apple’s weak August China numbers support iPhone bear case

Other analysts are looking forward to a big September uptick. Not Hall.

From a note to Goldman Sachs clients that landed on my desktop Friday:

Mainland China handset shipments weak in August. According to the China Academy of Information and Communications Technology (“CAICT”) data, handset shipments in the country were 24.3m units in Aug’21 (-15% M/M and -10% Y/Y). Although August tends to be a low demand month we note this is also down materially on the 32.6m and 30.9m units shipped in Aug’18 and Aug’19. This continues the ongoing trend of weak overall demand in China that we believe relates mainly to the market reaching full penetration.

iPhone 12 cycle still lower than iPhone X redesign cycle. Based on the CAICT’s disclosure for handset shipments from local brands in the country, we calculate that shipments in China from international vendors were 1.5m units in Aug’21, down from 2.5m units last year. We believe Apple shipments constitute the majority of these international shipments. This number is also down in comparison to levels seen in Aug’18 (2.3m) and Aug’19 (1.9m). Aggregate iPhone 12 cycle shipments (Sept-Aug) now total 43.7m compares favorably to 36-37mn units for the same time period in 2018 and 2019. This is down 13% on the iPhone X redesign cycle (2017/18) for the same time period.

Maintains Neutral rating and (underwater) $140 price target. 

My take: To quote Evercore’s Amit Daryanani

While August results were somewhat underwhelming and saw declines in both the market as a whole and in iPhone shipments, we would note that this likely points to a moment of pause in the weeks leading up to the iPhone 13 launch rather than a fundamental slowdown.

7 Comments

  1. Romeo A Esparrago Jr said:
    Johnson Rod who?

    I’d rather talk about AppleTV+‘s early debut of Asimov’s Foundation last night. Finished the 2nd episode just now.
    Primo. If you look deeply enough into Hari Seldon’s psychohistory of the future, I’m sure Apple’s imprints are there.

    5
    September 24, 2021
    • David Emery said:
      So, is “Foundation” up to expectations? (Should we have a separate thread to discuss it?)

      1
      September 24, 2021
    • Bart Yee said:
      Hell no! We get enough of his clickbait faux analysis already. So Apple has a one month August pause, acknowledged to be a slow month. China has been dealing with a few thing this summer but overall the common citizen is doing better than last year. Leaks surrounding the Apple iPhone 13 started in earnest in August, leading many potential upgraders and first time buyers to consider waiting for the iPhone introduction and discounts for the iPhone 12 which sold well.

      As China preorders exceeding 5M suggest, plenty of sales to be had, September will be a much bigger month than last year (Sept. will be more than Aug+Sept combined YOY) and we should see healthy iPhone 13 demand for the holiday quarter in China and worldwide.

      Oh, by the way Rod, Apple has continued to grow the installed base, makes plenty of money in other hardware and services segments, and doesn’t rely on the iPhone only, or haven’t you listened to Tim Cook?

      Apparently not.

      1
      September 24, 2021
  2. Timothy Smith said:
    Long line at Cincinnati apple store for pickups. Like the old days.

    5
    September 24, 2021
  3. Robert Paul Leitao said:
    Why has our famous cancel culture exempted Rod Hall?

    0
    September 24, 2021
  4. Daniel Epstein said:
    The best thing that a current Apple Stock holder can take note of from Rod Hall is his price prediction for Apple stock is is very close to the current price percentage wise. His predictions are usually 25% or lower than current price. Well if that relation holds then likely around 20 to 40 dollar rise in the share price is in the cards. The investors who followed him when he had an 85 dollar stock prediction have missed out on a huge gain and likely would again.

    2
    September 24, 2021

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