Investing.com– Apple Inc (NASDAQ:) is likely to see weaker sales of its flagship iPhone in December, UBS analysts said in a recent note, citing persistent concerns over slowing demand and falling market share in top market China.
UBS cut its iPhone unit/revenue estimates for December to 74 million units and $67.2 million revenue from 77 million units and $69.7 million revenue. While the brokerage does see some resilience in Apple’s services revenue, its lowered forecast for iPhone sales saw a 2% negative revision in UBS’ December quarter revenue estimates to $120.8 billion, which is lower than street estimates of $124.9 billion.
UBS also cut its earnings per share estimate for the December quarter to $2.25 from $2.31, compared to street estimates of $2.36.
The brokerage noted recent data from Counterpoint Research that iPhone sell-through declined 8% year-on-year in November to 20.7 million units, with China accounting for a bulk of this decline. The iPhone’s global share also sank to 20.1% in November- its lowest level since November 2019.
The brokerage noted that October and November usually account for a bulk of Apple’s iPhone sales in the December quarter, with a decline in November boding poorly for the technology giant.
“We now expect iPhone revenue to decline 5% YoY in the December quarter, missing both our estimate, the VA Consensus and implied positive growth highlighted by the company during the Sept quarter earnings report,” UBS analysts said in a note.
Apple has been grappling with years of slowing device sales, with a bulk of these declines being driven by weakening demand in China. The company is also facing heightened competition from local players such as Huawei and Xiaomi (OTC:).
Apple’s inclusion of artificial intelligence features in its flagship iPhone 16 models did little to stimulate sales, given that the company largely lagged its rivals in introducing AI features. The tech giant is also yet to roll out any AI features in China due to regulatory hurdles.
Still, Apple’s services revenue has remained robust, thanks to support from strong AppStore sales and demand for its software offerings. This is expected to limit overall declines in earnings.
UBS, one of the world’s leading financial services firms, has reported that iPhone sales in December were sluggish due to worsening demand in China. The firm attributes this slowdown to a combination of economic factors and increased competition in the Chinese market.
According to UBS analysts, iPhone sales in China have been affected by a weaker economy and ongoing trade tensions between the US and China. Additionally, domestic competitors such as Huawei and Xiaomi have been gaining market share in the region, putting pressure on Apple’s sales.
Despite these challenges, UBS remains optimistic about Apple’s long-term prospects, citing the company’s strong brand and loyal customer base. However, the firm warns that Apple may need to adjust its pricing strategy and product offerings in order to maintain its competitive position in the Chinese market.
Investors will be keeping a close eye on Apple’s upcoming earnings report to gauge the impact of sluggish iPhone sales in China. As the tech giant continues to navigate a challenging global landscape, UBS’s insights provide valuable context for understanding the company’s performance in key markets.
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