Increase in Apple iPhone Demand in China

Apple’s iPhone demand is reported to be showing signs of recovery in China. Jefferies analyst Edison Lee noted that growth is accelerating in the world's second-largest economy, questioning previously negative expectations.

In a statement to investors, Lee expressed that their tracking of firms shows that "leadership durations across all models and markets are continually shortening," and that this is limited to only a few exceptions.

The analyst stated that the leadership duration of the 17th generation model has nearly fallen to zero, and the leadership duration of the 17 Air has also almost dropped to zero. He emphasized that there is a strong trend in the leadership duration of the base model.

Despite short delivery times, Jefferies reported that industry research shows growth is accelerating in China. The firm estimated that total iPhone unit growth reached an annual rate of 19% during the first five weeks since the launch of the iPhone 17 shipments. This rate was described as "very impressive," while continuing to question their negative views on AAPL.

However, Jefferies warned that the recent momentum could pose risks to profitability. "Volume growth might be better than expected, but considering the aggressive pricing on the base model and the lack of increase in the average selling price of the 17 Pro model, we are maintaining our concerns about margin loss risks," Lee added.

The analyst also highlighted that there has been "significant depreciation in the second-hand market value" among all iPhone 17 variants; nonetheless, he pointed out that it is noteworthy that "all variants of the 17 Pro were offered at discounted prices for the first time after the launch."

Jefferies stated that there is "the strongest demand among the six markets we are monitoring" in China and Hong Kong, but explained that product mix and rising memory costs will "create margin risks for the entire smartphone industry by 2026."