Following Apple’s Q2 earnings report two weeks ago, UBS analyst Timothy Arcuri is out with a new investor note covering iPhone demand in China. According to UBS, iPhone performance dramatically improved during the month of April.

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Arcuri says that China iPhone sales were down 3 percent year-over-year in April, which is a drastic improvement in comparison to previous months. During December, January, February, and March of this year, iPhone sales were down an average of 66 percent, UBS says. The data is based on government smartphone sell-through data.

The UBS analyst attributes this improvement in iPhone performance to “overall market strength” in China. The overall Chinese smartphone market was up 6 percent during April after declining in 9 of the last 10 months.

This improvement was driven by overall market strength (China smartphones were up 6% after declining in 9 of the prior 10 months) as well as slightly easier comps.

It still appears, though, that the overall China smartphone market remains a little stronger than Apple (29% month-over-month growth compared to 19% for Apple) and Apple may have lost a little more share, though it is hard to read into monthly data as there are seasonal factors.

Going foward, Arcuri ssays that the month of May will be an important one for the iPhone in China. With trade tensions between the United States and China again growing, Arcurci warns that this could affect China consumer sentiment:

One of the reasons Apple CEO cited for China improvement was increased consumer confidence due to easing of US-China trade tensions. However, in recent days, trade tensions have escalated and it bears watching whether this affects China consumer sentiment.

The Trump adminstration on Friday increased tariffs on Chinese imports, but so far Apple has been sparred. This, of course, could change at any moment – and could counteract Apple’s improving iPhone sales in China.


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