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Investing.com-- China’s smartphone shipments fell for a second straight month in June as high inventories and weak sales weighed on demand, Jefferies analysts said in a note.
Shipments dropped 14% year-on-year, following a 21% fall in May, dragged by a roughly 31% decline in iPhone volumes and an 11% drop in local brands, analysts said.
"This is in line with our expectation, as production ramp, especially by local brands, in Dec 2024 and 1Q25 owing to optimistic outlook ahead of the gov subsidy program has been met by poor sales," analysts wrote.
While Apple (NASDAQ:AAPL) managed to regain market share through targeted discounts aligned with government subsidies, Jefferies estimated that overall smartphone sell-through slipped about 1% in June.
Huawei remained the only major local brand to post growth, rising 18% in June and 24% in the second quarter, helped by aggressive discounting, according to Jefferies.
In contrast, non-Huawei Android makers saw continued weakness, with volumes falling 4% in June and 8% in the quarter, the report said.
Jefferies noted that inventories have eased, with industry-wide finished goods inventory days down by about 15 in the past six months. iPhone’s inventory levels fell faster than Android’s due to production cuts and discounts. Still, industry recovery looks unlikely until the fourth quarter.
“Therefore, local Android brands (ex Huawei) are expected to continue facing pressure into 3Q25,” Jefferies analysts wrote.
Jefferies maintained its preference for Apple’s supply chain, highlighting Cowell (HK:1415), Crystal Optech (SZ:002273), Lante Optics (SS:688127), Luxshare Precision (SZ:002475) and Lingyi iTech (SZ:002600) as top picks likely to benefit from new features and form factors.