Amit Daryanani: Chinese iPhone shipments whipsawed this summer

Down 41% y/y in July after being up 225% y/y in June.

From a note to Evercore clients that landed on my desktop Wednesday:

ALL YOU NEED TO KNOW: The Chinese smartphone market was down 31% in July. CAICT data suggests MNC shipments (read, Apple) were down 41% y/y in July (vs. +225% y/y last month). The sharp decline in MNC shipments is unsurprising after the strong triple digit growth in June. It’s likely some sales were pulled into June and if we combine the June & July shipment figures we get two month growth of ~31%. YTD Apple shipments in China are up 5%, vs a 23% decline for the overall market as Apple continues to see notable share gains. The CAICT data for June just came out today, so it will be a couple of months before we get the September data which should give us our first look at the strength of demand for the iPhone 14. We expect demand for the iPhone 14 to be high in China and globally as lead times are already elevated in most regions. The CAICT data set includes shipments broken down by domestic vs. multi-national companies. Apple accounts for greater than 90% of the multinational (MNC) shipments, so it serves as a reasonable proxy now that shipment data is no longer broken down by operating system.

Net/net: Apple shipments were down notably, but this was expected after the very strong growth in June. Apple continues to gain significant share in China and we expect the share gains to continue.

Maintains Outperform rating and $185 target.

My take: Shipments to China were interrupted last summer, which is what made this summer look so strange.

9 Comments

  1. Steven Philips said:
    My understanding is that sat. communication can only be used for brief messages. Like some of the preset messages on iPhone. Like for requesting help etc. Definitely no news broadcasts. At least for several years.

    6
    September 14, 2022
    • S Lawton said:
      And the big guns like Musk’s Star link and Amazon and others have major plans to blanket the Earth With their satellites “Starlink, Amazon and others are racing to fill the sky with bigger satellites to deliver mobile coverage everywhere on Earth”

      1
      September 14, 2022
      • Gregg Thurman said:
        There’s going to be a need for a good traffic cop up there.

        3
        September 14, 2022
        • Steven Philips said:
          Gregg are you angling for a ride on one of Musk’s rockets! 🙂

          1
          September 15, 2022
      • Steven Philips said:
        Sandy, At one time weren’t there rumors of Apple setting up a satellite network?

        0
        September 15, 2022
  2. Bart Yee said:
    Huawei announced they would have some type of Satellite texting capability in their newest Mate 50 flagship phone which will use the Beidou Chinese GPS satellite system and only be available over mainland China. For now, Apple has not announced satellite capability beyond US and Canada.

    It is not clear what China’s satellite comms ability is but IMO it’s likely to have more than is known, especially if they have linked up to Russian satellites. A report in Space News says China plans to expand massive space satellite constellations around the globe for various commercial internet (and undoubtedly military and intelligence capability) over the next 15 years or so:

    “The recently approved 14th Five-year Plan for the period 2021-2026 and “long-range objectives through 2035” call for an integrated network of communications, Earth observation, and navigation satellites.

    China has already constructed its Beidou navigation and positioning system and is deploying Gaofen satellites for its China High-resolution Earth Observation System (CHEOS).”

    “China is to oversee the construction and operation of a national satellite internet megaconstellation through coordinating the country’s major space actors.

    Recent comments by senior officials indicate that plans are moving ahead to alter earlier constellation plans by space sector state-owned enterprises and possibly make these part of a larger “Guowang” or “national network” satellite internet project.

    Spectrum allocation filings submitted to the International Telecommunication Union (ITU) by China in September last year revealed plans to construct two similarly named “GW” low Earth orbit constellations totaling 12,992 satellites.

    The filings indicate plans for GW to consist of sub-constellations ranging from 500-1,145 kilometers in altitude with inclinations between 30-85 degrees. The satellites would operate across a range of frequency bands.”

    13,000 satellites – traffic cop indeed. It will be an international logistical and practical nightmare to locate, track, and steer clear for other satellites.

    0
    September 15, 2022
    • Bart Yee said:
      Space News Article link:
      https://(remove this space)

      spacenews.com/china-is-developing-plans-for-a-13000-satellite-communications-megaconstellation/

      0
      September 15, 2022
    • Bart Yee said:
      Call me cynical, but it wouldn’t be out of the James Bond realm for a number of satellites critically to be positioned near other countries’ critical communication and military GPS and satellite based positioning systems (perhaps for dependent military targeting) and set to loiter there masking as comm satellites.

      Then when time comes, onboard explosives or maneuvering allows said satellites to become “enemy” satellite killers or disablers. It really doesn’t take much – shrapnel, damage to solar panels or antennas, just physical impacts enough to cause tumbling or deviation from
      precise orbits or antenna orientations renders a satellite link degraded or severed.

      Considering what redundancy is built into US military or commercial systems is constrained by budgets and technological advances over the past 30 years, and that China will have latest (not necessarily greatest) tech up now, the more recent Iridium and Star Link programs must provide some of that redundancy.

      I am not aware of any space based sat-on-sat weapons treaty but I haven’t searched for it. I wouldn’t be surprised if all sides have considered or deployed such systems though.

      0
      September 15, 2022

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