Apple Faces Challenges in China as iPhone Shipments Decline

Market Share Woes: Apple Inc. AAPL is witnessing a decrease in its market share in China, largely due to falling iPhone shipments, according to supply chain analyst Ming-Chi Kuo.

Recent Insights: Kuo, from TF Securities, indicated that Apple has been “cautious” about discussing its iPhone production plans for 2025 with key suppliers. Although the company plans to launch the new iPhone SE 4, he predicts a 6% decline in shipments during the first half of 2025 compared to the previous year.

The analyst believes that Apple’s market share will continue to drop, noting that the sleek designs of two upcoming iPhone models may be limited to eSIM compatibility—a feature not heavily marketed in China. He remarked, “These two models could face shipping momentum challenges unless their design is modified.”

Smartphone Market Context: Although overall smartphone shipments in China remained stable year-over-year as of December, Apple’s iPhone shipments fell by 10% to 12%. Kuo also mentioned that Apple’s on-device AI feature, known as Apple Intelligence, has not yet led to significant hardware upgrades or increased services revenue.

For 2024, Kuo estimates Apple’s iPhone shipments at about 220 million units, with projections for 2025 ranging from 220 million to 225 million. These numbers fall below the market consensus, which stands at approximately 240 million.

Significance of the Decline: This situation arises amidst several challenges for Apple. Recently, an analyst downgraded the company’s rating from Neutral to Sell and reduced the price target from $202 to $188. MoffettNathanson’s Craig Moffett pointed to the sluggish performance of the iPhone 16 models, which incorporate AI, alongside ongoing geopolitical tensions with China as key issues.

Additionally, Apple settled a lawsuit for $95 million regarding allegations related to unauthorized recordings of Siri. Following this, the company clarified that it has never sold or commercially utilized Siri data.

Amid these controversies, CEO Tim Cook received an 18% increase in his annual compensation for 2024, totaling $74.6 million, as revealed in a recent proxy filing.

Stock Performance: On Friday, Apple’s stock experienced a 2.41% drop, according to data from Benzinga Pro. Analysts have set a consensus price target of $245.17 based on the evaluations of 30 analysts monitored by Benzinga. Recently issued ratings by MoffettNathanson, Bernstein, and B of A Securities suggest an average price target of $234.67, indicating a slight projected decline of -0.99%.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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