IPhone sales at Apple China soar in Q2

Chinese customers look at iphones at the official opening of the new Apple Store in the Sanlitun shopping area on July 17, 2020 in Beijing, China.

Kevin Frayer | fake pictures

Apple was the fastest-growing smartphone maker in China in the second quarter, according to research data, which showed that the iPhone maker withstood the general decline in the world’s second-largest economy.

The cheaper iPhone SE and the popularity of the iPhone 11 series, along with huge discounts, helped Apple gain a boost in one of its most critical markets.

China iPhones sales volume was 7.4 million units in the April-June quarter, up 32% year-on-year growth, according to Counterpoint Research. Direct selling refers to iPhones that go to Apple’s retail partners and is a close indicator of actual sales to consumers.

In comparison, the Chinese phone maker Huawei saw sales volumes of 36.6 million units, or 14% more compared to the previous year. Apple sells significantly fewer phones than Huawei in China.

Oppo, Vivo and Xiaomi, the brands that make up the rest of China’s top five major players, experienced a significant decline, while the overall market fell 17% yoy.

Separately, the figures from Shanghai-based CINNO Research showed that iPhone sales rose 62% yoy to 13 million in the second quarter. CINNO Research tracks sales instead of direct sales. Quarterly, iPhone sales increased 225%, starting from a low base, but also highlighting a recovery for the Cupertino giant after the coronavirus outbreak forced the closure of its stores in China and reduced sales in the three months. that ended in March.

Since a low in February, when Apple sold fewer than 500,000 phones, the company has seen a steady rebound, thanks in part to the iPhone 11 series launched last year.

“The iPhone 11 remains the best-selling model in China. The iPhone 11 has consistently led as the best-selling model in China since last September, indicating Apple’s strong brand power among Chinese consumers,” says Flora Tang, an analyst. research team, he told CNBC by email.

The latest third-party figures come ahead of Apple’s official fiscal third-quarter earnings release on Thursday.

Apple also offered huge discounts on iPhones during a major Chinese online shopping festival in June that helped keep the momentum going. The cheapest second-generation iPhone SE was also among the top 3 best-selling iPhones in China in the second quarter, Counterpoint Research said in a note.

On the service front, Apple also seemed pretty tough. The App Store generated $ 4.4 billion in gross revenue in the second quarter, 4% less than $ 4.6 billion in the first quarter, according to Sensor Tower data. However, that was a 13% year-over-year increase.

“Spending on the China App Store generally increases between Q1 and Q2 each year, but the Q / Q decline this year could be attributed to the ecosystem normalizing after COVID-19 height in the country,” Stephanie Chan, Mobile information strategist, he told CNBC by email.

All eyes on iPhone 12

China activated its 5G networks last November and its national smartphone manufacturers launched 5G-capable devices. 5G refers to next-generation mobile networks that promise super-fast data speeds.

A third of the smartphones sold in China in the second quarter were 5G phones, the highest adoption in the world, according to Counterpoint Research.

However, Apple does not yet have an iPhone 5G. But several analysts expect the next iPhone model, potentially called the iPhone 12, to be compatible with 5G.

“We hope that iPhone 5G will gain immediate traction in China, if Apple bets on a juicy pricing strategy. Chinese consumers have been well educated on the benefits of 5G, and Chinese telecom operators are promoting 5G plans at competitive prices.” Tang from Counterpoint Research said.

Daniel Ives, an analyst at Wedbush Securities, said in a note published Monday that Apple has seen “a continued decline in demand in China during the month of June and the first half of July despite some speed bumps and the scenario is is preparing for a large build-up. ” The iPhone 12 cycle is heading into the fall in this key region, as well as globally. “

He anticipates that 60 million to 70 million iPhones in China are in the “window of an upgrade opportunity over the next year with Apple aggressively going at all price points (SE, iPhone 12) to consolidate its installed base despite the competitive pressures from national players. “