Apple solves its Chinese puzzle, iPhone sales climb 155%

China still seems to love iPhones

There’s little doubt Apple stock has taken a beating in recent weeks as investors raced to cover themselves in case the combination of COVID-19 supply chain challenges and worsening international relationships take their toll. But UBS analyst, David Vogt, says that Apple’s iPhone sales in China posted a strong rebound in May, “notably outperforming” the market.

Some big data points, iPhone sales up 155%

That’s praise indeed, but according to the report on Investing.com, the analyst cites a 13% rebound for iPhone. He describes Covid lockdowns as abating and supply chain shortages improving – even as Apple continues to diversify its chain to build in better resilience.

While accepting a dramatic fall in smartphone shipments in China in March and April, he also said:

• May smartphone shipments in China overall fell 9% YoY.
• But shipments climbed 16% on a month-to-month basis, he said.
• iPhone shipments increased 13% YoY.
• Smartphone shipments fell 14% Y-o-Y.
• iPhone shipments increased 155% month-on-month in China, said Vogt.
• iPhone shipments down just 9% in China, compared to industry average 23%.
• Estimates its existing 42 million iPhone sales estimate should be about right.

The analysts estimate the market share for local brand devices fell to 84%, even as iPhone generated more interest in China. The analyst keeps a $185 price target on AAPL stock.

[Also read: President Biden ‘proud’ Apple workers vote to unionize]

Apple holds the line

His thoughts follow last week’s comments from Morgan Stanley, who also maintain a $185 target on AAPL. (Though they cut ten dollars off recently). That firm said in a note received by me:

“With a loyal installed base of 1.1B+ users, greater exposure to the high-end vs. low-end consumer, ability to invest through cycles, and strong FCF/ROIC, we believe Apple is the best positioned company in our coverage to weather a consumer downturn.

“Apple historically shows greater insulation from economic cycles, outperforming our coverage by 18 points, on average, late in the economic cycle, and is entering 2 separate product launches which generally get priced in 6-9 months ahead of time (iPhone 14 launch in September & a rumored AR/VR headset release in 2023).”

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