Securities house says Apple’s fiscal Q3 earnings to benefit from strong Chinese iPhone sales

Apple will be releasing its fiscal third-quarter earnings report this coming Thursday, August 3rd. According to securities firm Wedbush, higher demand for the iPhone in China could translate into higher iPhone revenue for the quarter. A report to Wedbush clients seen by AppleInsider says that a “clear uptick in demand” for the iPhone in China could allow Apple to report improvements in iPhone revenue for its fiscal Q3 despite a choppy global smartphone market.
China is the largest smartphone market in the world and during the calendar second quarter, one report said that 10.4 million iPhone units were shipped in the mainland from April through June. That was only one million units less than the number of handsets shipped by co-leaders Oppo and Vivo. At the end of the second quarter, Apple’s market share in China was 16%, right on the heels of the 18% owned by Vivo and Oppo. Wedbush says that Apple has picked up 3 points in market share in China over the last 12 months.
In the report, Wedbush says that it is surprised to see demand for the iPhone 14 remain strong this late in the cycle. Part of the reason for the strong showing is the “overall upgrade activity” taking place even though we are possibly just five weeks away from the unveiling of the iPhone 15 line. 25% of active iPhone users are due for an upgrade which should help the device continue to see steady demand worldwide.
Wedbush says that with 100 million new iPhone units being added to the number of active units over the next 18 months, demand should grow for Services such as the App Store, Apple Music,  Apple News+, Apple Arcade+, AppleCare, ApplePay, AppleCard, iCloud, Fitness and more. Strong demand for Services should lead growth in this segment to “reaccelerate” in the upcoming quarters “back to a double-digits trajectory.”

Wedbush values the Services unit at $1.3 billion to $1.4 billion based on the value of its parts. The securities house, like many others on Wall Street, says that Apple’s second-largest business unit “remains an underappreciated asset by the Street.”

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