Apple Staring At Market Share Decline In China Amid Declining iPhone Shipments: Top Analyst Flags Why Some Models Could Be Face Shipping Momentum Challenges

Apple Inc. AAPL is experiencing a drop in its market share in China. This decline is attributed to a decrease in iPhone shipments, as reported by supply chain analyst Ming-Chi Kuo.

What Happened: Kuo, an analyst at TF Securities, revealed that Apple has been “cautious” in discussing its 2025 iPhone production plans with key suppliers. Despite the expected launch of the new iPhone SE 4, Kuo forecasts a 6% year-over-year decline in shipments for the first half of 2025.

He also expects Apple’s market share to continue to decline, attributing this to the thin design of two upcoming iPhone models, which may only support eSIM, a feature not widely promoted in the Chinese market.

“These two models could face shipping momentum challenges unless their design is modified,” he said.

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In December, while overall smartphone shipments in China remained stable year-over-year, iPhone shipments saw a decline of 10% to 12%. Kuo pointed out that Apple’s on-device artificial intelligence feature, Apple Intelligence, has yet to drive hardware upgrades or boost services revenue.

For 2024, Apple’s estimated iPhone shipments were around 220 million units, with projections for 2025 ranging from 220 million to 225 million, falling short of the market consensus of 240 million or more, according to Kuo.

Why It Matters: This news comes in the wake of a series of challenges for Apple. Earlier in the month, an analyst downgraded Apple from Neutral to Sell and lowered the price target from $202 to $188. MoffettNathanson analyst Craig Moffett cited the lack of traction for iPhone 16 models featuring artificial intelligence and ongoing geopolitical tensions with China.

See also <!DOCTYPE html><html lang="en"><head> <meta charset="UTF-8"> <meta http-equiv="X-UA-Compatible" content="IE=edge"> <meta name="viewport" content="width=device-width, initial-scale=1.0"> <title>Magnificent 7: A Deep Dive Into Recent Earnings</title></head><body> <h2>Market Reactions and Expectations</h2> <p>Following recent earnings releases from Google's parent company Alphabet and electric vehicle pioneer Tesla, investors exhibited disappointment in their reactions. The market's focus, particularly on the Alphabet report, could be a harbinger for the forthcoming earnings reports of other members of the elite 'Magnificent 7.'</p> <p>The Alphabet report showcased a number of positives, including surpassing estimates and notable growth in search and cloud segments. Despite these strengths, the market fixated on the higher-than-anticipated capital expenditure figure, signaling concerns about escalating AI-centric investments without a clear payoff timeline.</p> <p>The upcoming reports from Meta and Microsoft are likely to shed light on similar capital expenditure concerns. Meanwhile, Amazon's decelerating growth trajectory in contrast to Microsoft and Alphabet's accelerating trends raises questions about its competitive position in the cloud market.</p> <p>Apple's recent foray into AI initiatives faces skepticism, with market attention shifting towards evolving iPhone trends in the critical Chinese market. Comparatively, while Alphabet's earnings soared by 28.6% year-over-year, Tesla experienced a 45.3% decline in Q2 earnings.</p> <h2>Analyzing Growth Prospects</h2> <p>An examination of consensus expectations for the 'Magnificent 7' reveals projections of a 26.8% upsurge in earnings and a 13.7% increase in revenues compared to the previous year. The Technology sector, on the other hand, is forecasted to witness a 16.8% earnings growth and 9.5% revenue rise.</p> <h2>Industry-wide Trends</h2> <p>Over the past few quarters, the Technology sector has experienced a positive trend in earnings revisions, with the 'Mag 7' leading the surge in estimates. Amidst this backdrop, the ongoing Q2 reporting cycle is poised to unveil insights into over 1000 companies, including prominent members of the S&P 500.</p> <p>A notable highlight of the current reporting cycle is the historical context of revenue beats percentages, with the Q2 figure representing a new low over a 20-quarter period. This challenging environment sets the stage for increased scrutiny over revenue performance.</p> <h2>Earnings Season Overview</h2> <p>As the Q2 earnings season unfolds, the amalgamation of actual results and estimates paints a picture of a 6.9% uptick in S&P 500 earnings alongside a 5.2% revenue surge from the prior year. The consistent revisions in estimates leading up to Q2 reflect a resilient outlook compared to past quarters, with positive expectations projected for the remainder of the year.</p></body></html><html><head> <title>Insight Into Declining Earnings Growth on an Ex-Finance Basis</title></head><body>The Resilience of Earnings Growth Amid the Decline in Ex-Finance Basis

Apple also reached a $95 million settlement in a lawsuit regarding allegations of unauthorized Siri recordings. After the Siri privacy policies lawsuit, the company clarified that it has never sold or used Siri data for marketing purposes.

Despite these controversies, Apple’s CEO Tim Cook saw a significant increase in his annual compensation in 2024. Cook’s total compensation for 2024 rose by 18% from the previous year, reaching $74.6 million, the company said in a proxy filing on Friday.

Price Action: On Friday, Apple’s stock saw a 2.41% decrease, according to Benzinga Pro data.

Apple has a consensus price target of $245.17, according to 30 analysts tracked by Benzinga The most recent ratings, issued by MoffettNathanson, Bernstein, and B of A Securities on Jan. 7 and 3, 2025, suggest an average price target of $234.67, implying a slight downside of -0.99% based on these assessments.