Counterpoint: How iPhone got to No. 1 in China

“Apple’s stellar performance was driven by a mix of its pricing strategy and gain from Huawei’s premium base.”

From “Apple Reaches its Highest Ever Market Share in China” posted Wednesday:

Apple surpassed vivo in Q4 2021 to become the #1 brand in China after six years, when the iPhone 6 supercycle was at its peak. Q4 2021 also brought Apple its highest ever market share in China at 23%, according to Counterpoint Research’s Monthly Market Pulse Service. However, China’s smartphone sales in Q4 2021 declined 2% QoQ and 9% YoY, respectively. The country’s full-year smartphone sales also continued the downward trend for the fourth consecutive year, declining 2% YoY in 2021.

Commenting on Apple’s performance, Research Analyst Mengmeng Zhang said, “Apple’s stellar performance was driven by a mix of its pricing strategy and gain from Huawei’s premium base. Apple rose to first place in China right after the iPhone 13 was released (week 39) in September. Afterwards, it remained in the leading position for most of the fourth quarter. The new iPhone 13 has led the success due to a relatively lower starting price at its release in China, as well as the new camera and 5G features. Furthermore, Huawei, Apple’s main competitor in the premium market, faced declining sales due to the ongoing US sanctions.”

Cue the charts:

My take: This is what Wedbush’s Daniel Ives has been saying for weeks.

11 Comments

  1. Michael Goldfeder said:
    Dan Ives v. Rod Hall. Reminds me of a tank having a head on collision with a tricycle.

    6
    January 26, 2022
    • Robert Paul Leitao said:
      Thank you, Michael! I was about to post something very similar. We’ll know tomorrow who has the best numbers on the December quarter. On the surface, this analysis appears to contradict some of what Rod Hall has recently said. Of course, I have confidence in what Dan Ives has been saying and his analysis of Apple’s prospects for the December quarter and the fiscal year.

      2
      January 26, 2022
      • Michael Goldfeder said:
        @Robert: Tim Cook is the best supply manager Guru on the planet, and I’m confident that his decision to slow the production on iPads and use those parts on the iPhone 13 is going to pay huge dividends and be recognized tomorrow with a substantially larger revenue number than anyone on WS outside of Dan Ives has predicted.

        That’s Innovation!

        5
        January 26, 2022
  2. John Konopka said:
    Awesome result. Interesting to think of the crowd of hard-working middle managers working in the trenches to make this happen. I used to manage the Asian reps for our division. You are always dealing with late shipments, customs problems, items damaged or lost in shipping, banking issues, language issues, and on and on. God bless them. Lots and lots of people pulled together to make this happen.

    4
    January 26, 2022
  3. Bart Yee said:
    Notice that there is no mention of other Non-Chinese made smartphones market share other than Apple. Despite having Samsung owned or partnered ODMs in China, Samsung has barely a single percent, if that, of Chinese market share. Nationalistic buying engendered by the trade wars and cultural differences may be at work here too.

    3
    January 26, 2022
    • Arthur Cheng said:
      why would a Chinese in China buy an Android phone made outside of China when there are plenty of locally made ones of all price range available? Samsung has nothing over the top Huawei.

      0
      January 27, 2022
  4. John Butt said:
    Is a 7% point increase (16-23%) with a market dropping 9% a gain or not? Mathematically it is about a 25% increase in sales, so yes it is. Estimize members and Wall Street are forecasting 8% and 9% in revenue growth yoy from Estimize’s page.

    1
    January 26, 2022
  5. Bart Yee said:
    Counterpoint notes that 4 out of every 5 smartphones sold in China are 5G capable and Apple has carved out a sizable presence in the premium market overall. This is precisely why a competitively priced 5G iPhone SE3 2022 model, if well accepted, could continue Apple market share growth. The difficulty is whether the continued use of the iPhone 8’s increasingly aging form factor is useful and competitive, or should Apple move to the larger but still relatively inexpensive iPhone XR style full display model chassis in 2023? Parts constraints, especially displays and drivers may prove to be the deciding factors.

    2
    January 26, 2022
    • Robert Paul Leitao said:
      Bart: I expect a conspicuous form factor change for the update to the 5G version of what’s now called the iPhone SE. I also expect it to be a big seller for the June and September quarters. In other words, it will boost iPhones sales volume in the latter half of the fiscal year. For more passive users seeking to replace an aged iPhone handset with a modern 5G version and for parents seeking to equip a younger child with an iPhone, I expect it to be a compelling purchase option.

      2
      January 26, 2022
  6. Fred Stein said:
    This is a massive victory. In the China’s premium smartphone segment, Apple has virtually no competitive. It’s a validation of sanctions and of Apple’s long investments in deep tech.

    And there’s more. Apple’s drum roll continues in 2022 with smaller phones and price action moving down market. If we get Apple 5G on TSMC 3n, another upgrade cycles starts, especially up market.

    4
    January 26, 2022
  7. Miguel Ancira said:
    we still have no idea the magnitude of this if true…just 18 months ago the stock took a hit because of ‘headwinds in China’…the fact that it completely turned around and came out on top is just massive

    2
    January 27, 2022

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