Discounting in China not enough as Apple continues to cede share, says UBS

UBS notes that in the month of May, Apple’s iPhone “sell-through” remained soft declining 2% year-over-year, the 5th consecutive monthly year-over-year decline. The firm estimates iPhone sell-through in China was largely flat year-over-year during May 2024 in a market that grew 11% year-over-year. While Apple bulls may note the data is backwards looking and is not likely indicative of Apple’s AI smartphone opportunity next year, UBS notes that iPhone share loss to Huawei and other Chinese OEMs acts as a material governor on iPhone unit growth. During the most recent iPhone “cycle” driven by the 5G enabled iPhone 12, Huawei smartphone units in China declined roughly 60% as technology restrictions handicapped the company while Apple units grew 36% over the same period. Given Huawei’s refreshed product line-up, this tailwind for Apple is unlikely going forward, the firm argues. UBS has a Neutral rating on the shares with a price target of $190.