The ‘worst’ is over for iPhone sales in China according to UBS analyst Timothy Arcuri, suggesting that while Apple still has plenty of work to do in the Chinese market, the company could now slowly begin to see the fruit of its labor partially thanks to price reductions.
According to Arcuri’s latest note to investors, Apple is managing to now clear inventory in the country thanks to the various price reductions the company has offered carriers and customers.
Arcuris report says “While March mix is still bad, the tone in the supply chain is staring to improve and price reductions in China may be starting to clear channel inventory.” In an effort to boost iPhone sales Apple slashed the prices of numerous models in China earlier this year. These included discounts on the iPhone 8, iPhone 8 Plus, iPhone XR, iPhone XS, and iPhone XS Max. Most iPhones received price cuts of around $59. The biggest reduction was around $66 off the price of the iPhone XR.
Apple CEO Tim Cook said at the beginning of the year that the company is “rethinking” iPhone pricing, with Apple looking to go back to pricing that’s “more commensurate” with what local prices were last year to boost sales.
UBS says procurement estimates for the iPhone XR are actually on track to increase quarter-over-quarter.
While March mix is still bad, the tone in the supply chain is starting to improve and price reductions in China may be starting to clear channel inventory, Arcuri wrote. Procurement estimates for XR are actually now up Q/Q in June – atypical for this late in a ‘new’ model cycle (good near-term for QRVO), but reflective of inventory burn.