Chinese smartphone shipments continue to fall although iPhone deliveries rose last month
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Brokerage firm Goldman Sachs analyzed smartphone data compiled by the China Academy of Information and Communications Technology (CAICT). The numbers revealed that November smartphone shipments in China amounted to 29.6 million units last month, down 15% from last year. On a sequential basis, shipments rose 13% from October. Shipments of international brands, of which Apple is believed to be the leader, were up a whopping 99% to 6.9 million units last month from the same month in 2019. From October 2020 to November 2020, international shipments rose 18%.
The aforementioned 15% decline in November smartphone shipments in China compares to year-over-year declines of 13%, 36%, and 27% for August, September, and October respectively. Goldman’s Rod Hall said that despite strong demand for 5G enabled phones, the overall smartphone market was weak in the country. Hall told clients, “We see these ongoing weak trends as interesting given Chinese 5G units have been better than we expected but not enough to offset the very weak overall demand environment.”
According to Goldman Sachs, Apple iPhone deliveries in China were up during November. In the investor note, Hall stated, “In our opinion, the overall market weakness that we continue to see in China may be beginning to translate into higher-end demand stagnation at Apple. We also note that lower-end market strength in China is important for the absorption of refurbished/2nd hand iPhones which could have a negative effect on device resale pricing and the trade-in value that new iPhone buyers experience.”
Hall is bearish on Apple and expects the price of the stock to drop from the current $122.10 to $75 over the next 12 months. That would be a 39% decline; the analyst maintains his “sell” rating on the stock. While the consensus expects Apple’s first 5G iPhone models to generate growth in China, Hall says that year-over-year growth “may not be as pronounced as many investors believe it will be in the iPhone 12 cycle.”
Questions & Answers
Q.What was the total volume of smartphone shipments in China last month, and how does this compare to the previous year?
What was the total volume of smartphone shipments in China last month, and how does this compare to the previous year?
Total smartphone shipments in China amounted to 29.6 million units last month. This figure represents a 15% decline compared to the same period in the previous year.
Q.How much did shipments of international brands increase last month compared to 2019, and which company is the believed leader?
How much did shipments of international brands increase last month compared to 2019, and which company is the believed leader?
Shipments of international brands rose by 99% to 6.9 million units last month compared to the same month in 2019. Apple is believed to be the leader among these international brands.
Q.Why does Goldman Sachs analyst Rod Hall maintain a 'sell' rating on Apple's stock, despite the rise in iPhone deliveries?
Why does Goldman Sachs analyst Rod Hall maintain a 'sell' rating on Apple's stock, despite the rise in iPhone deliveries?
Rod Hall is concerned that overall market weakness in China may be affecting higher-end demand for Apple. He also notes that strength in the lower-end market is important for absorbing refurbished iPhones, impacting resale values.
Q.What is Rod Hall's prediction for Apple's stock price over the next 12 months, and what decline does that represent?
What is Rod Hall's prediction for Apple's stock price over the next 12 months, and what decline does that represent?
Rod Hall expects Apple's stock price to drop from $122.10 to $75 over the next 12 months. This prediction represents a 39% decline in the stock's value.
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