ICYMI: Apple Is Gaining Ground On Activated Smartphones In China

It may hold true that Apple Inc. AAPL's iPhone is losing market share in China to domestic competitors, but it doesn't tell the full story.

The Analyst

Morgan Stanley's Katy Huberty maintains an Overweight rating on Apple's stock with an unchanged $200 price target.

The Thesis

Data from IDC shows that Apple's iPhone accounted for only 7.6 percent of smartphone shipments in China throughout 2017, which marks a notable decrease from 12 percent after the iPhone 6 launch, Huberty said in a note. (See Huberty's track record here.) 

Data from Jiguang, a China-based firm that aggregates smartphone data, found that Apple is in fact the leader within the active smartphone user base in China — the installed base. 

Apple's share of active users in China rose over 400 basis points this year to 19.5 percent, which is superior to market share gains from major Chinese smartphone brands, the analyst said. 

"Chinese-branded smartphones have a shorter replacement cycle versus Apple, suggesting they have to sell more phones to achieve the same share of activated smartphones," Huberty said. "We believe the more accurate indicator of vendor strength and potential upgrade demand in China is active smartphone market share, where Apple gained leading u to the iPhone 8/X launch."

Bottom line, based on data from Jiguang, it is reasonable to conclude that the iPhone's best days in China "are still ahead."

Price Action

Shares of Apple were trading higher by around 0.6 percent Thursday morning.

Related Links:

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Photo courtesy of Apple.