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JP Morgan sees signs of recovery for the iPhone in China

iPhone 16 Pro is expected to benefit from an upgrade super cycle

Even before the iPhone 16 hits the streets, the latest research from investment firm JP Morgan shows that iPhone sales are continuing to increase in China, helped in part by a recovering smartphone market in the region.

In the last couple of months, JP Morgan has told its investor clients that Apple’s problems in China were increasing, but that it would recover. Then after WWDC’s announcements, JP Morgan raised its Apple stock price to $245 in anticipation of a strong upgrade cycle for the iPhone 16 range because of the forthcoming Apple Intelligence.

Now it’s reporting that sales in China have already begun to improve. Specifically for the latest data covering May 2024, JP Morgan says that sales are already increasing.

Citing figures from the official China Academy of Information and Communications Technology (CAICT) for May, JP Morgan reports that iPhone sales rose 44% compared to April 2024. They also rose 40% compared to May 2023.

While positive, the increase is still less than Apple has previously seen. At this stage of the year, JP Morgan says that normal seasonality would be around a 55% growth.

Overall, smartphone vendors in China all saw increases that are encouraging, but below previous norms. CAICT says the total number of smartphone shipments rose 26% in May 2024, compared to the previous month, and 16% compared to the previous year.

Bar and line chart showing fluctuating international brand values and Y/Y percentage changes from August 2020 to April 2024.

International Brand Mobile Phone Shipments in China. Units in Millions, Y/Y % Change (Source: JP Morgan)

Apple’s year over year sales are down 8% for May. However, in January 2024, Apple’s sales were down 38% year over year.

Looking at the year to date, though, Apple’s sales are now up 17% in the year to date. That’s still below the 20% share Apple has previous seen in China.

According to previous research by Counterpoint into iPhone sales in China, the iPhone 15 peaked higher than its predecessor, the iPhone 15.

So while overall Apple is still facing problems in China, the current trend is toward recovery. And all analysts now expect the iPhone 16 to see a boost from Apple Intelligence.