Apple's new iPhone is undermining its earning power in the Chinese market
There is little sense of surprise at the new iPhone presentation
“It's the best and most capable iPhone!” On the 12th of this month, at the presentation of the new smartphone “iPhone 15” $Apple (AAPL.US)$ CEO Cook discussed the workmanship of the company's latest models and uttered the opening words. In addition to the adoption of a new high magnification optical zoom camera, the charging board was completely transferred to a “USB-C terminal,” and all new functions remained within the range predicted in advance, such as using titanium to aim to reduce the weight of the exterior. While prices remained unchanged, with 15 being 799 dollars, Plus being 899 dollars, and Pro 999 dollars, Pro Max was raised from a minimum capacity of 128 gigabytes (GB) to 256 GB, and the price was also raised by 100 dollars to 1,199 dollars. The company has been pursuing a strategy that appeals for higher added value than the number of units sold. According to a survey by the US research company IDC, the average sales price of the company's smartphones in 2022 was 996 dollars, which is 30% higher than in '17. There was little sense of surprise at the presentation of the new iPhone, which predicts the US year-end sales season, and the company's stock price turned slightly lower than the previous day.
The global smartphone market is saturated
According to IDC's latest survey, it was revealed that global smartphone shipments in 2023 are expected to fall 4.7% from 2022 to 1.15 billion units, the lowest level in the past 10 years. IDC has revised downward the forecast that until now the number of units shipped in '23 had decreased by 3.2% compared to '22. Although global smartphone demand is expected to recover after 24, there was only a slight increase over the next 5 years, and the global smartphone market entered a state of saturation.
Under such circumstances, as the US-China confrontation intensifies, the Chinese government prohibits government office employees from using iPhones, etc., and Apple is determined to maintain market share in the “Greater China region.” Of the 81.797 billion dollars in sales for the 2nd quarter of 2023, the “Greater China region,” which includes China, Taiwan, and Hong Kong, is about 20%, making it the most important market after the United States. According to the Chinese research company CINNO Research, the number of smartphone sales in China in 2023 is expected to fall 2% from the previous year to 250 million units against the backdrop of a round of smartphone spread and a prolonged replacement cycle. In response to the overall contraction in the Chinese market, iPhone sales volume in China is expected to be around 45.5 million units, down 2% from the previous year. Sales performance of the latest model iPhone 15 series is further sluggish, and sales volume in 2023 is expected to be around 10 million units, and compared to the iPhone 14 series sold around the same period in 2022, it is expected to decrease by 22%, or about 2.9 million units.
The revival of Huawei, the enemy that blocked Apple's top 1
It is not limited to the US-China confrontation, and the revival of its nemesis Huawei is also threatening Apple's share of the Chinese market. The new smartphone series (Mate 60/Pro/Pro+) sold by the largest Chinese telecommunications equipment manufacturer Huawei at the end of 23/8 was equipped with a semiconductor with a circuit line width of 7 nm compatible with 5G developed in-house. Although there is a gap between the Mate 60 Pro (6,999 yuan, about 950 dollars), which has a speed equivalent to an iPhone made in 2018, compared to the 4nm iPhone 15, the communication speed is also at the same level as 5G, so it seems that sufficient performance can be demonstrated. According to local securities, it was predicted that the Mate 60 Pro would rise to 15 million units within 1 year of sale, the effects of Huawei's new smartphone would spread, and overall Huawei smartphones would increase 65% from the previous year to 38 million units.
On the 25th of this month, UBS lowered the estimated shipment volume of the iPhone 15 series from 80 million to 90 million units to 78 million units, assuming that the iPhone 15 lacked a decisive hit. “In the high-end market, Apple's monopoly will continue next year, but in the price range of 600 to 800 dollars, there is a possibility that Apple's market share will continue to decline due to competition with Huawei and other Chinese manufacturers,” he mentioned the possibility that Apple's market share will decline due to competition with Huawei, etc.
Also, as shown by the phenomenon where saving-oriented wealthy customers shop at Walmart due to high inflation, the rice retail business, which has many high-income people, is following a downward trend in sales. Every time a new model of iPhone debuts, it is also being converted into a high-end product for the wealthy. It is certainly visible that the wind from inside and outside surrounding Apple will intensify.
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