The iPhone broke the promotion, the Indian market sought increment, and Apple climbed another $3 trillion high

After four months of waiting, the node was fixed on December 5, local time in the United States. As of the close of the day, Apple's stock price closed at $193.42, up 2.11%, with a total market capitalization of $3.01 trillion.

Approaching the end of 2023, Apple's stock price of $3 trillion is once again rushing, which can be regarded as the end of the past ups and downs. Looking back on the past year, as a product that contributes nearly half of the revenue, the iPhone has not been spared from the decline of the overall environment. In order to boost sales, channel providers had to reduce prices and promotions, and the acceleration of new product sales and the return of Huawei's 5G gave Apple a heavy blow.

However, it still needs to be pointed out that while the vast majority of mobile phone brands are trading at a loss, Apple has earned more than 8% of the world's profits. In addition, the rise of the Indian market has also allowed Apple to find new increments.

Ivan Lam, senior analyst at Counterpoint, told Titanium Media App, "India has become the most populous country, and it has a decent birth rate, a large young population and active spending. For Apple, it is an important potential market for the next decade. ”

The sale was broken, Huawei made a surprise attack, and the iPhone was "forced" to reduce the price

Judging from Apple's latest third-quarter financial report data, the company's overall revenue is $89.498 billion, and iPhone, as a fist product, contributes nearly half of the revenue. Therefore, to a certain extent, the market performance of the iPhone determines the overall judgment of investors on Apple.

According to the latest report released by market research agency Counterpoint Research, global smartphone shipments are expected to be 1.2 billion units this year, down 5% year-on-year, the lowest level in nearly a decade. The narrowing of the market has intensified the competition and "involution" of the industry. In order to maintain the overall growth, the price of the iPhone has also experienced many fluctuations in the past year.

At the beginning of this year, the iPhone14 series started price reduction promotions in authorized stores and third-party e-commerce platforms, and the topic of "iPhone14 price reduction of 700 yuan for all series" was on the hot search list. An authorized store employee once told Titanium Media App that at that time, due to the squeezing of a lot of inventory on the iPhone14, coupled with the high sales pressure at the beginning of the year and the poor market industry, price reduction was the fastest and most effective way to ship.

If the price reduction at the beginning of the year is to clear inventory, then the new iPhone 15 series will be subsidized and promoted for more than a month, and it is difficult to find another reason to justify. After all, the iPhone 14 series has been on sale for three or four months when the price cut at the beginning of the year, while the iPhone 15 series has just been on sale not long ago.

Judging from the subsidy information disclosed by various channels on Double 11, Jingdong's authorized self-operated stores have a maximum discount of 1100 yuan, and Apple's official flagship store on Tmall has also launched a subsidy of "500 yuan off for 6988 yuan". Although these subsidies are the behavior of e-commerce platforms, and the direct sales channel has not reduced the price, it is enough to see the pressure on the sales of the iPhone15 series.

"The product power is still 'too poor', and there is no innovation that can stimulate consumers' purchase pain points", an analyst pointed out to Titanium Media App, "The market has been tired of Apple's behavior of squeezing toothpaste for many years, and at the moment of excess performance, there are many alternative products on the market, not die-hard fans, and the willingness to pay is easily shaken." ”

Previously, CINNO Research had predicted that the sales of Apple mobile phones in China's smartphone market may reach 45.5 million units in 2023, a slight decrease of 2% year-on-year. Among them, Apple's latest-generation iPhone 15 series models may sell around 10 million units in 2023, a decrease of about 2.9 million units compared with the sales performance of the previous generation iPhone 14 series in the same period.

Ivan lam, senior analyst at Counterpoint, also pointed out that the stock of the iPhone 15 series is currently around 80 million units, which may be slightly less than 80 million units. Apple will adjust its production plan for Q1 2024 based on sales in October or November.

In addition to the "lack" of its own product strength, the strong return of Huawei's mobile phone is also a heavy blow to Apple. UBS's downgrade of shipments of the iPhone 15 series also indicates that it is due to risks such as Huawei's new phones. Martin Yang, an analyst at investment bank Oppenheimer, said that iPhone shipments could be reduced by 10 million units in 2024 due to the launch of Huawei's new mobile phones.

On August 29th, Huawei Mate60 Pro was not released for sale, which caused a rush in the market, and then launched a series of products such as the Mate60 standard version, which is also hard to find. Until now, the Huawei Mate 60 series is still in a state of buying at a higher price, in contrast, Apple's iPhone 15 series evaporated more than $40 billion in market value on the day of release, the standard version broke on the day of sale, and the Pro series also broke a week after the sale.

iPhone 15 and Huawei Mate 60 series recycling price (December 5)

Zhong Xiaolei, a research analyst at Canalysy, told Titanium Media App that Apple is expected to face more challenges in the future. In view of the current imbalance between supply and demand, Huawei is also actively using measures such as 90-day pre-orders to lock in demand as soon as possible to prevent the loss or transfer of pent-up demand when supply exceeds demand.

Guo Tianxiang, a senior analyst at IDC China, also believes that in the future, with the return of Huawei and other domestic Android manufacturers striving to establish their own high-end product rhythm and high-end brand image, Apple will encounter greater challenges in China's high-end mobile phone market.

The supply chain has shifted, and the Indian market has become a new increment

Since the beginning of this year, Cook has successively "shown favor" to the Indian market, and the opening of direct stores and localized production have accelerated the penetration of iPhone in high-end user groups. Not only that, but with Apple's emphasis on the Indian market, many fruit chain companies have also begun to move.

Ivan Lam told Titanium Media App that it was imperative to move manufacturing to India. The advantage of building factories in India and Southeast Asia is that it is close to the market, has great potential in the future, and can enjoy policy dividends within a certain period of time. Fruit chain enterprises, especially some local orders that are sufficient to support local operations, will gradually migrate to the past.

Statistics released by Counterpoint Research show that the revenue performance of the Indian market in the second quarter of 2023 surpassed France and Germany for the first time, lagging behind the United Kingdom, Japan, Chinese mainland and the United States, becoming Apple's fifth largest iPhone market.

Canalys analyst Sanyam Chaurasia told Titanium Media App that India's premium segment is growing as disposable income grows, and this segment has not been affected by macro-related issues.

Image source: Cook social platform

In the third-quarter earnings call, Cook also mentioned that the company's revenue in India hit a record high. Apple's sales in India rose 48 per cent to Rs 49,321 crore and net profit surged 76 per cent to Rs 2,229 crore in FY 2022-23, according to regulatory filings with the Registrar of Companies (RoC).

At the same time, Counterpoint's report also pointed out that the trend of ultra-premium (more than 45,000 Indian rupees, about 4,000 yuan) has been steadily gaining momentum every quarter, and the market has grown by 44% year-on-year in the third quarter. Apple hit a new high in quarterly shipments in the third quarter of 2023, surpassing 2.5 million units.

It is worth noting that compared to the rising Indian market, China, Apple's third largest market, contributed 17% of the performance in the third quarter, but the decline was second only to Japan.

"The Indian market is a very promising market for growth, and for Apple, it is an important potential market for the next decade. Apple has taken India as a strategic market, and the collaborative manufacturing supply chain is gradually entering India, which is the work for sustainable development", Ivan Lam told Titanium Media App, "Apple has maintained a relatively good brand image in India, and the phased marketing and sales strategies have achieved good responses." No matter in terms of the interaction and ecological construction of the operating system, it has continuously consolidated its user stickiness and increased the cost of replacement. ”

Morgan Stanley analysts have issued an estimate that in the next five years, the Indian market will account for 15% of Apple's total revenue and 20% in production.

Ming-Chi Kuo, an analyst at Tianfeng International Securities, also said that in 2023, about 12% to 14% of the world's iPhones will be produced in India, and if all goes well, the proportion of iPhones produced in India in 2024 will increase to 20% to 25%.

For Cook, he also wanted to replicate the "Chinese experience" in the Indian market. Judging from objective data, the rapid growth of the population has put India in the stage of "demographic dividend", and the low labor cost will save a lot of manpower for enterprises.

A Foxconn intermediary revealed to Titanium Media App that the monthly salary of ordinary workers at Foxconn in India is about 800-1,000 yuan, and the salary of newly graduated graduate students is less than 2,000 yuan. In contrast, the basic salary of domestic regular workers is more than 2,000 yuan, and the salary of graduate students is also about 10,000 yuan.

However, manpower is only part of the cost, and the cost of labor in India is low, but it is also inefficient. "The quality and awareness of employees is difficult to train and manage, and what can be done by one person in India often requires three people. ”

The intermediary also revealed that there is a big gap between the yield rate and efficiency of Indian factories and those in China. According to reports, in February this year, Foxconn's Indian factory complained that the pass rate of the back case of the mobile phone they received was less than 50%, which seriously slowed down the assembly of iPhones. Not only that, but for the iPhone15 assembled in India, it has also attracted the "disgust" of the market.

There is no doubt that India will be Apple's new growth focus compared to markets such as China, which are becoming increasingly saturated. However, as for the transfer of the industrial chain, some enterprises have wavered. As the intermediary said, "It is not so easy to take over the Made in China".

The ups and downs returned to the $3 trillion high,

apple

Where is the next breakout point?

As of the close of the U.S. stock market on December 5, Apple's stock price closed at $193.42, up 2.11%, and the total market capitalization regained its high of $3 trillion. At this moment, many investors have been waiting for 4 months.

Since the beginning of this year, Apple's stock price has risen by 49.7%, and the overall performance has been very good. However, compared with Nvidia, Tesla and other doubled technology giants, Apple's performance is not too outstanding.

Image source: Counterpoint

According to a previous report released by Counterpoint, global smartphone shipments are expected to increase by 3% year-on-year in 2024, and the recovery in emerging markets will be more obvious, and Canalys expects the global smartphone market to rebound by 2024, with shipments reaching 1.17 billion units, up 4% from 2023.

The same is true for the PC market, where JPMorgan Chase & Co. believes that PC manufacturers' shipment forecasts have been revised upwards for the first time in a long time, and growth is expected to return to 2024. Canalys' forecast points to PC shipments in 2024 that are expected to increase by 8% year-on-year to 267 million units.

However, there is another uncertainty in front of Apple, and that is the application of AI. It is worth noting that the recovery predictions of market institutions for terminals such as PCs are more based on the growth brought by AI applications. Canalys pointed out that artificial intelligence (AI) PCs will be one of the growth drivers, and the proportion of AI PCs will reach 19% in 2024.

Previously, it was reported that Apple is making big AI-related recruitment efforts and accelerating the implementation of AI technology through mergers and acquisitions of startups. According to TrendForce, Apple has acquired more than 20 AI-related companies since 2018. Cook said that AI technology is used behind these features, but we don't use the word AI to advertise it. As for generative AI, money is also being invested in various efforts.

Indeed, judging from the voice function of iOS 17, fall detection on the Apple Watch, and other functions, AI has become an important part of Apple's ecological products. It's just that what the market probably wants to see is Apple's application of large models on the end side, especially mobile phones and PCs, which are considered to be the carriers of the first revolution in large models. In the future, whether Apple's stock price can continue to rise depends on how much "AI content" Apple has on the product side. (This article was first published on the Titanium Media App, author/Du Zhiqiang, editor/Zhong Yi)