Apple and other major U.S.-based companies see China as a big prize to be won because of the sheer size of the nation’s economy, and as a result, any growth in China is a big deal. The macro environment in China hasn’t been good over the last month or so, causing investors to doubt whether Chinese consumers will continue buying discretionary goods like smartphones, however, smartphone buying there remains strong.
Apple has emphasized that it continues to see strong growth in China and in fact recorded an acceleration in activations in July and August. However, Stifel analysts noted a new trend that might be concerning for the company. While non-Android phones did continue to grow quite rapidly, Android and Chinese-branded smartphones began growing faster over the summer.
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Non-Android smartphones up in July, August
Stifel analyst Aaron Rakers and his team recorded a 180% year over year increase in non-Android smartphones for July and August. For the June quarter, they saw a 165% increase from last year. They believe that Apple makes up the bulk of the non-Android smartphones. So far this year, Apple has been seen as benefiting from the strong growth of non-Android smartphones in China.
However, they saw Android smartphone shipments made up about 92% of the smartphone shipments during August, which is an increase from 86% in July but down slightly from 95% in August 2014.
That means non-Android phone shipments for August were at about 3.5 million. That’s a 203% year over year increase but 37% month over month decline.
China-branded mobile phones rising
Looking more closely at the types of phones, the Stifel analysts said China-branded phones shipped there in August made up about 89% of the total estimated phone shipments during the month. That’s an increase from the previous month’s 83% and 79% in August 2014.
The Stifel analysts said this steady increase is pressing them to look more closely at China’s nationalization efforts. The numbers suggest that China-branded phones increased 33% year over year for July and August, while non-China branded phones only grew 1% compared to last year.
Shares of Apple closed up 1.46% at $114.21 per share on Friday.
All graphs in this article are courtesy Stifel.