Investing.com -- iPhone sell-through rates have declined substantially in China after the Chinese New Year (CNY) holiday, according to Jefferies.
The firm’s industry checks reveal that these rates have been falling by a double-digit percentage, indicating that the rollout of iPhone 16e “has not been able to support overall iPhone sales in China, even though 16e is covered by the government subsidy program,” Jefferies analysts said.
The overall smartphone shipment in China for January 2023 experienced a 17% year-over-year (YoY) decline and a 24% month-over-month (MoM) decrease, totaling 24.5 million units.
Adjusting for the CNY, which took place on January 29 and resulted in a week off for most companies, the estimated shipment figures show a 1% YoY and 10% MoM reduction. Smartphone shipments had risen YoY in nine of the previous twelve months in 2024.
In December 2024, shipments surged to 32.4 million, marking a 21% YoY increase and the highest month of the year, likely fueled by inventory build-up in anticipation of an early CNY and a government subsidy program for 3C products (computers, communications, and consumer electronics).
However, post-CNY sales have been underwhelming, with February sell-through down by double digits and March showing no improvement.
Inventory levels for both Android and iPhone devices have risen by approximately 21 days over the past six months.
The average inventory days for local Android manufacturers have reached around 50 days, compared to the normal range of 35-40 days. With weak sales persisting, Jefferies expects further inventory adjustments and subsequent shipment declines in the following two months leading up to the 618 shopping festival.
The performance among Android brands has been mixed, with Huawei and Xiaomi (HK:1810) experiencing growth, while other key Android brands have seen negative growth.
Huawei’s success is primarily attributed to aggressive discounting, while Xiaomi’s growth is deemed more substantial due to limited discounting. Year-to-date, Honor (SZ:300870) has reportedly lost the most market share, followed by iPhone.
Jefferies notes that iPhone discounts have remained limited across most platforms, with the exception of Pinduoduo (NASDAQ:PDD).
On PDD, price cuts for the 16 Pro and Pro Max have been steadily increasing, and last week saw a noticeable uptick in discounts for the iPhone 16 and 16 Plus—likely reflecting softer demand. Meanwhile, discounting on other platforms has stayed relatively restrained.
“That likely drove iPhone’s continued weakness in China," analysts said. We remain bearish on overall smartphone demand, including Apple (NASDAQ:AAPL)."