Ming-Chi Kuo predicts a 6% YoY decline in iPhone shipments in the first half and a continued decline in its market share in China.

Analyst Ming-Chi Kuo of Tianfeng International Securities wrote online on Friday that Apple (AAPL.US) will face multiple challenges, including near-stagnant iPhone growth, limited contributions from AI services, and continued shrinking in the Chinese market. Kuo said Apple has taken a more cautious approach to its production plans for this year after discussions with major suppliers. Apple estimates its shipments this year will be 220-225 million units, unchanged from last year's 220 million, lower than the market's expectation of 240 million. Therefore, Kuo estimates that even if Apple will launch a new iPhone SE4 in the short term, its shipments in the first half of the year will still decrease by 6% year-on-year. He also said that the Chinese market's smartphone shipments in December 2024 will be flat compared to the same period in 2023, but iPhone shipments will decrease by about 10% to 12%, indicating that the iPhone's market share in China is still shrinking. He expects the ultra-thin iPhone (about 5.5mm thick) and the planned foldable iPhone to not support physical SIM cards due to their pursuit of thin designs, and may only support eSIM. As China's market does not promote phones that only support eSIM, these two models will not be conducive to shipment momentum if they do not change their designs. This is another reason he expects the iPhone's market share in China to continue to decline. On the other hand, he sees no evidence that Apple's integration of Apple Intelligence in electronic devices will be beneficial to device sales or service upgrades.