Apple's iPhone 16 cycle may not be enough to boost China sales

Apple (AAPL) continues to lose market share in China as, to which UBS analyst David Vogt believes, the next iPhone cycle may not be enough to boost device sales in the region.

Yahoo Finance Tech Editor Dan Howley breaks down the tech consumer sentiment as more Chinese shoppers are pivoting to Huawei smartphones.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Luke Carberry Mogan.

Video transcript

Now, Apple is set to launch its A I centric phone in September, but losing market share in China, its third largest region for sales for more of an in depth Look at this.

We got Yahoo.

Finance is Dan.

How for more?

Dan, great to see you.

Thanks so much for being on with us.

Talk to me about what we're seeing here.

Yeah, this is, uh, coming from David Vaught.

Who's at U BS Global Research.

Basically saying that.

Look, the next iPhone cycle, Uh, meaning the next iPhone to come out, which is presumably the iPhone 16.

Uh, isn't expected to be kind of this huge sales super cycle where people go out and trade in their their phones and mass for the next version.

Uh, it's not going to be a repeat.

Uh, according to V of what we saw with the five G phones, Um, that was when phones started to come out with five G, uh, capabilities.

People went from four G to five G. Um, frankly, I mean, the difference hasn't really been all that great.

Uh, overall.

Uh, but still, it was a newer technology, so people went out and purchased new new iPhones.

Um, and so the the thinking would be OK, Well, here comes Apple intelligence.

Uh, this is a new reason for people to want to upgrade.

But there are some problems here specifically, uh, with uh, Apple's market share loss in China.

Now, uh, basically what vault says is Look, at the time that five G was coming out for the iPhone, Huawei was getting kneecapped by the Trump administration around 2019 and a little after, obviously with the Biden administration as well.

And so because of that, Huawei wasn't able to offer the kind of phones that people wanted.

People then moved over to iPhone.

But now that Huawei is back, they're able to offer comparably impressive devices.

And so now they're going back to Huawei.

And so it's eating away at some of Apple's market share in the region.

And Apple intelligence might not be the thing that gets people to go back.

And so because more people are on with Huawei now, it means that they may not necessarily want to go over to Apple, and so that could, as vaude say, be a material governor to iPhone unit growth in 2025 now there's a few other things to point out here with China and Apple.

Obviously, as you said, it's the third largest region by revenue, behind the Americas and then Europe.

But it also has obviously regulatory issues that it's going to have to deal with.

How it rolls out Apple intelligence in the country is going to be a big deal.

Part of the pitch of Apple intelligence was that it's not going to be saving any data.

When people go to access different A, I features.

We'll have to see how that works in China, uh, as well as different other features.

Open a IS, uh, access, um, that people get when it comes to the new version of the iPhone and the next versions of I, OS and iPad, OS and and Mac OS.

Uh, specifically.

So you know, there's a There's a number of things going on here, but, you know, as as far as, uh, a supercycle for this next generation of iPhones, at least according to to what it could be, uh, problematic, I think one other thing to to point out, though, is that numbers of device sales are very hard to gauge.

just because Apple doesn't provide those exact numbers, It's all based on how, uh, the the general revenue number comes in for iPhones.

That's what Apple now provides.

So you're kind of taking a stab at?

Is it the newest phone?

Is it the oldest phone?

Uh, is it you know, the high end version?

Is it the the midrange version?

So it's it's all kind of difficult to to properly, uh, gauge which devices are selling and which aren't Dan really quickly here?

I'm curious.

What will you look at To indicate that we are at the bottom in terms of the pressure on iPhone sales coming out of China.

Look, I think right now, uh, there's some news out of Bloomberg saying that, uh, they had done their their own, uh, run their own numbers and seen that That there was a boost in sales, 40% in May and 50% in april.

I believe, uh, was what they saw year over year increases.

Uh, that's a result of some of the big sales that apple has been having in in the region.

Uh, you know, they've been cutting prices.

There were holidays going on.

They wanted to kind of get those out the door.

And so seemingly it's been paying off, I think, you know, for for Apple, uh, China is is clearly incredibly important.

But there's there's different consumer taste in China as well.

Foldable phones are a big part of the sales over there, and that's why we see companies like Huawei offering foldable phones.

Samsung has its own foldable phones.

Uh, Google has its own foldable phone.

Uh, apple?

Not so much.

So you know, there's there's a number of different.

Uh, I think, uh, attributes that Apple could work on there to improve its place.

It's not gonna roll out a foldable phone until it's absolutely perfect.

There's still, you know, some things to work out with them.

Um, especially as far as durability goes, Uh, but I think you know, when it comes to the the bottom that we're seeing, it all just comes down to whether or not we're going to start to see improved growth.

Uh, in the next quarter or two.

All right, Dan, thank you so much for joining us on all things, uh, iPhone sales coming out of China.

We appreciate it.