China's smartphone market picking back up, says Apple supplier Dialog
Roger Fingas
The CEO of Apple power chip supplier Dialog Semiconductor sounded a positive note on the Chinese smartphone market on Thursday, though whether or not Apple will benefit remains to be seen.
"The market for mobile phones was pretty soft particularly in China in Q1, but I think from late Q1 and going forward it has started to pick up," Jalal Bagherli told CNBC. He noted however that Huawei and Xiaomi are "exhibiting much higher growth than others."
The country's weak iPhone sales began to recover in the March quarter, but are still dwarfed by local brands.
Nothing major will happen on a global level "until 5G really kicks in," Bagherli continued, "which will be probably a year to 18 months from now."
Apple's 2019 iPhones, coming this fall, are expected to use 4G Intel modems even though some of the first 5G Android phones are on the market. Intel was reportedly too slow developing 5G chips, and in fact said it would exit that field following Apple's legal settlement with Qualcomm. That's setting the stage for 2020 iPhones to use 5G Qualcomm parts.
5G can be dramatically faster than 4G, to the point that it may be a replacement for landline internet in some cases, and is often considered essential for the spread of technologies like AR, VR, and self-driving cars. U.S. coverage is still extremely limited though, and the fastest variety — millimeter wave — has a short range that will mostly limit it to urban areas.
Dialog announced its March-quarter earnings on Thursday, in which it revealed that over 300 of its workers have moved to Apple, and that Apple business not covered by a $600 million licensing deal rose 92 percent year-over-year to $46 million.
Apple is bringing power chip designs in-house. To make that happen it paid Dialog $300 million upfront in 2018, promising another $300 million to buy assets through 2021. That's forced Dialog to seek other clients in sectors like automotive, industrial, and IoT.
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2 Comments
Apple will never be able to win back Chinese consumers who switched to Android smartphones. Chinese consumers are now happily using less expensive, domestic-branded smartphones and running WeChat which works just fine on some any no-name Android smartphone. Apple went and priced themselves out of a potentially huge market and now has very little to show for it. There's not a single feature Apple could put on the iPhone to bring back Chinese customers as Android smartphone manufacturers have already done it all. Although I don't think it's important, but Apple will be far behind all Android smartphones when it comes to implementing 5G and it will be another small reason for Chinese consumers not to buy iPhones. Most flagship smartphones are just too expensive for the majority of consumers. Apple has basically lost its iPhone business to Android in China and India with no hope of recovery. As an Apple shareholder, I find it totally discouraging and that Apple never anticipated it happening. I thought the iPhone would have some advantage in selling AR apps but that never happened. No matter what Apple does, it always seems to backfire on them.
I’m not sure how much you know about the Chinese market or Apple, but you seem to be working from the wrong mindset. How do you know the Chinese are happily using other brands and why do you think WeChat is the only software required? Let me shine some light on this situation.
I wouldn’t say they priced themselves out of a market, but they did set expectation by not selling a commodity phone. The Chinese and Indian markets will be very different than they are today, iPhones will be affordable to plenty.
“By 2030, China should have approximately 1.4 billion middle class consumers compared to 365 million in the U.S. and 414 million in Western Europe. India is next, with its citizens moving up the income ladder and reaching a sizeable 1.07 billion in a little under 20 years.”
https://www.forbes.com/sites/kenrapoza/2011/09/05/within-a-generation-china-middle-class-four-times-larger-than-americas/#50b163162966
Chinese new money is just as bad as the rest of the world. If someone wants to look successful, a domestic Xiaomi phone won’t cut it. Your argument completely disregards luxury goods and affluent buyers. You do know that Apple entered a very mature US mobile market with the first iPhone? It’s a bit dramatic to say Apple “basically lost” their iPhone business in China and India, considering Apple’s not trying to win the most phones sold competition. Apple is wining the most profit competition and reinvesting into the whole operation from stores to R&D.
Your right about 5G not being important, but only within the scope that neither China or the US will have a fully deployed network till well after the iPhone gets 5G in 2020. What if the Chinese find out that for the additional cost of 5G, WeChat will not run faster... Oh the horror! If anything, 5G will allow a new generation of mobile games, which coincidently get the highest frame rates on iPhones.
There really isn’t a feature that Apple can offer to bring back Android switchers, because mobile phones have hit multiple technology barriers and phone use cases are specific to an individual. It was never really about a feature in the first place, that’s what Android manufactures don’t understand. Apple’s secret sauce is software, that is what sells hardware. I’m starting to doubt you own Apple stock, you don’t really seem to understand your investment.
From a brand perspective, the iPhone is not a singular product. The true product is Apple and it’s ecosystem stickiness. One can argue that Android phones have caught up to Apple in many ways, it only took them over a decade. The next generation technologies that Apple is developing now, will create another time gap without true competition. Make no mistake, without a consumer product to copy, Apple’s competitors are terrified. They can only guess at Apple’s future products and don’t have the resources to perform on the same level anyway. So we will see more foldable phones and other strange things, as competitors blunder about trying to throw everything at the wall.
Good thing it’s not to late to sell Apple stock and buy Samsung or Xiaomi. I hear they’re stock prices will eventually get back up there.