China’s shipments of smartphones fell 16% in January, due in part to escalating inventory, which was in sharp contrast to Apple (AAPL) iPhones demonstrating a slight month-over-month decline in rolling six-month inventory days, according to data by Jefferies.
“Since our checks indicate smartphone sell-through in Jan. fell 22% (partly due to Chinese New Year timing), we estimate Android’s rolling 6-month inventory days have risen by 26 (down by 3 days in Dec.), while iPhone is down by 2,” said Jefferies analysts, led by Edison Lee, in a Thursday investor report.
The iPhone’s healthier inventory reflects strong demand along with several months of shipment declines.
“iPhone’s shipment fell 37% (43% adj. for CNY), while Android shipment fell 11% YoY (19% adj. for CNY),” Lee added. “This is only the 2nd month of YoY decline after five consecutive months of growth. Since sell-through has generally been weak (sell-through YoY has been negative for 4 out of the past 6 months), we see smartphone shipments in China will continue to fall YoY in the next few months, especially for the Android camp. That is on top of the pressure to raise prices as of 2Q26 due to skyrocketing memory prices.”
This could also affect Qualcomm (QCOM), as it produces various components for Android phones, such as CPUs and 5G modems. However, some of the largest producers of Android phones in China, such as Huawei and Xiaomi, have started transitioning away from Qualcomm in favor of domestic companies.
Jefferies also noted an increase in promotional discounts for Android phones in China as opposed to iPhones.
“Our tracking shows consistently limited promotional discounts on iPhones,” Lee said. “PDD (PDD), being the most aggressive platform according to our tracking, has been offering only mid-single-digit discounts on the iPhone 17 series, while there has been no discount on Tmall. However, we saw double-digit % discounts across key eCommerce platforms on Android flagship models, including Huawei Mate 80, vivo X300, OPPO Find X9, and Xiaomi 17.”
The average discount on PDD for Android flagship models has increased to an average of 24%.
“That shows the pressure for key brands to reduce inventories,” Lee added. “However, as memory costs are skyrocketing, it would create more pressure for Chinese OEMs to cut shipments in order to rely on selling inventories and thus protect margin.”