The launch of Huawei’s Mate 60 series phones containing its in-house 5G chip the Kirin 9000S could help the phone maker regain market share from Apple Inc (NASDAQ:AAPL) in China, according to analysts at the Bank of America.
“This launch marks a significant milestone for the company after being cut off from critical supply due to U.S. sanctions in 2019,” the analysts wrote, referring to sanctions that banned American companies from selling software and equipment to Chinese firms.
“Huawei has historically been a national favorite in China, with the #1 largest market share for Asia Pacific Handset of 12.3%, followed by Samsung (11.2%) and Apple (7.9%) in 2018. However, Huawei's market share in the Asia Pacific Handset market declined from 15.7% in 2019 to 3.1% in 2022,” they wrote.
The analysts noted that the launch of the Mate 60 series outside of China remained in question and, unlike other product launches, Huawei did not provide details on the system-on-a-chip (SoC) or network capability.
“If Huawei has the capability to supply and scale its home-grown Kirin 9000S, we see the Mate series phones as an opportunity for Huawei to increase its shipments and regain its market share, potentially posing downside risk to iPhone sales, especially in the Asia Pacific.”
Based on their 2024 estimates, that wrote they see a slightly more than $0.01 per share impact for Apple for every 1 million iPhones sold.
Therefore, they forecast that if Huawei were to gain back 10 million units from Apple in China, this would create a $0.11 headwind to Apple’s 2024 financial year earnings per share.
“If Apple were to lose the 30 million units gained since the sanctions began, we could see a far greater impact of $0.34,” they wrote.
Their price target on Apple stock remained unchanged at $210 with a 'Neutral' rating.
“We maintain our 'Neutral' rating on Apple, as positives of new product launches are offset by a weaker spending environment,” the BoA analysts wrote.
Apple shares traded at US$188.60 late morning on Tuesday.
Contact the author at emily.jarvie@proactiveinvestors.com
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