After a six-year hiatus, Apple, Inc. (NASDAQ:AAPL) reclaimed the smartphone leadership position in China in the fourth quarter of 2021. An analyst at Bernstein delved into the reasons for Apple's turnaround.
Huawei's Loss Is Apple's Gain: Apple has been bleeding smartphone market share in China up until recently, Toni Sacconaghi said in a note. The company witnessed its market share cut in half between 2015 and 2019.
Homegrown rival Huawei was the culprit behind Apple's market erosion, the analyst said.
As Huawei began to take a firm grip on the market, the U.S. sanctions on the company in 2019 came as a dampener, Sacconaghi said. The company's China unit shipments slipped from 136 million in 2019 to a mere 46 million units in 2021.
During the same period, Apple's market share increased 980 basis points, with shipments increasing from 35 million units to 48 million units.
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Strong iPhone Cycle Adds Verve: Apple's success in the last two years is only partly attributable to Huawei's fall from grace, Sacconaghi said. Historically, Apple's performance in China improved during iPhone "super cycles," the analyst said.
The analyst highlighted the iPhone 6, X and 12 "super cycles" to prove his point.
Moreover, Apple has been gaining smartphone market share globally since the launch of the iPhone 12.
"We estimate that about a third to one-half of Apple's strength in China is attributable to Huawei share gains, while the rest has been driven by a strong iPhone 12/13 cycle, following two weak upgrade years in 2019 and 2020," Sacconaghi said.
At press time, Apple shares were slipping 0.5% to $158.86.
