Apple iPhone 1Q Shipments Tumble Most Since Covid As Demand Wanes In China 

Apple shares were lower in the premarket session in New York after a report from International Data Corporation showed iPhone shipments plunged by 10% in the first quarter, pressured by sagging sales in China. None of this should be a huge surprise, given our previous notes highlighting the decline in overseas iPhone sales (read: here, here, and here). 

According to the IDC, Apple shipped 50.1 million iPhones in the first quarter, down 9.6% from the 55.4 million units shipped in the same quarter one year ago. Compared with other smartphone manufacturers in the report, the Cupertino, California-based company recorded the most significant year-over-year decline since Covid lockdowns disrupted supply chains in China in 2022. 

Meanwhile, Apple's demand woes allowed Samsung to be crowned the top handset manufacturer for the quarter, with a 20.8% market share and more than 60 million units shipped. 

Even with an Apple slowdown, global handset shipments, including all other companies tracked by IDC, rose 7.8% to 289.4 million in the quarter. 

"As expected, smartphone recovery continues to move forward with market optimism slowly building among the top brands," Ryan Reith, group vice president with IDC's Worldwide Mobility and Consumer Device Trackers, wrote in a statement. 

Reith continued, "While Apple managed to capture the top spot at the end of 2023, Samsung successfully reasserted itself as the leading smartphone provider in the first quarter. While IDC expects these two companies to maintain their hold on the high end of the market, the resurgence of Huawei in China, as well as notable gains from Xiaomi, Transsion, OPPO/OnePlus, and vivo will likely have both OEMs looking for areas to expand and diversify. As the recovery progresses, we're likely to see the top companies gain share as the smaller brands struggle for positioning." 

Since early January, institutional desks, Barclays, Piper Sandler, and Jefferies have warned about a downturn in iPhone sales, mainly because of a slowdown in China. 

In early March, Goldman removed Apple from its "Conviction List" and Evercore ISI dropped Apple from its "Tactical Outperform" list, which both banks cited mounting concerns about an iPhone sales slowdown, particularly as China's economic troubles worsened.

Following IDC's report, Goldman's Sean Johnston told clients that if the forecast is correct "that Apple shipped 50.1m iPhones in Q1 vs. Street of 51.7m ... then this risk rewards on top of minds as we head into the earnings season. Negative for Apple supply names – in Europe think STM & Soitec." 

Apple shares in New York have underperformed the broader index so far this year.

The big picture is that Apple faces mounting pressure in China, particularly from Huawei. Also, Beijing's ban on iPhones from state-run companies and a "wave of patriotic buying" of domestic brands are awful news for Apple.