Apple maintains tension in the Chinese market due to the resurgence of Huawei

Despite the situation of geopolitical tension that American companies suffer in China, Manzana tries to reassure its investors and assures that its presence in the Asian market remains strong. Tim CookCEO of the company, is sure that they have achieved a quarterly record in iPhone sales, as they managed to be responsible for four out of every five best-selling smartphones in urban China.

While it is true, the data shows that sales of iPhone devices have fallen after the rebound of Huawei, which in turn has benefited the rise of other local manufacturers that have significantly increased their market share. In this way, despite the fact that the market has been registering significant falls in sales, Apple expects to sell more iPhones in the last quarter of the year.

It is estimated that total smartphone sales in China They fell 3% between July and September compared to the figures for 2022, something that meant a decrease in iPhone sales in China of around 6%. However, the company blames these losses on tough computer sales. Mac and iPadCook assured that sales increased after taking into account exchange rates.

Stock market uncertainty and the muted pullback in tech stocks has led to falls of more than 14% in Apple shares from July to October, compared to the 11% fall in the Nasdaq, accumulating more than 33% since the beginning of the year. In fact, it is estimated that The average target price is $197.47.which represents an additional potential of 12.5%.

The reality is very different and iPhone 15 sales were 5% lower if they are compared to those of the iPhone 14 in the first 20 days of its launch. Apple is afraid of Huawei’s market dominance, but is reluctant to give up the battle.

In three of the four quarters of fiscal 2023, the company experienced a decline in sales. This has led him to drastically reduce iPhone 15 prices, while in the rest of the markets the device is sold at its recommended price. China has aggressively discounted its entire iPhone15 range to encourage sales, setting up fierce competition between partner sellers in a value for money battle to win customers. These discounts can be up to $205 compared to the recommended market price.

A reduction in production is projected in the Chinese locations of Zhengzhou (between 35% and 45%) and Taiyuan (between 75% and 85%). In this way, although the iPhone 17 would arrive during the second half of 2025, it is expected that production would start in the summer of 2024.

Growth forecasts

Apple predicts quarterly earnings of $1.39 per sharewhich would mean an increase of 7.8% compared to the same period in 2022. For its part, Revenues could reach a valuation of $88.32 billion, down 2%.

There has recently been a downward revision to its EPS. Consensus estimates that iPhone revenue will reach $44.17 billion with net sales of services around $21.35 billion.

In favor of Apple’s resurgence in China are the country’s economic data, which demonstrate a growth of 4.9% during the third quarter of the yearabove forecasts, but less than the 6.3% of the second quarter.

Optimistic news for Apple

In recent days it has been known that India has lifted the veto on Apple after the block of unauthorized imports. Import authorizations will be valid until September 2024, which Apple will take advantage of to gain market share, like other technology companies such as Asus, Samsung, Lenovo and IBM. This will lead Apple to double production in the Asian country for iPhone in 2024.

In 2023, 12% to 14% of global iPhone shipments were made in India. If these growth forecasts hold, the proportion of iPhones manufactured in the country will increase to 20-25% in 2024which will allow pressure on China to reduce its technological and economic dependence.

This situation coincides with the recent purchases of Tata Group from Wistron Corporation’s iPhone production facilities. Thus, new products such as the iPhone 17 are expected to break into India and Apple will demonstrate a certain independence from Foxconnwhich currently owns almost 80% of the technology company’s production capacity in India.

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