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Apple ( AAPL ) and Huawei will take share from Samsung and Xiaomi within the Chinese smartphone market, leading to mass volatility and an inventory work-down for chipmakers like Broadcom ( AVGO ), Qorvo ( QRVO ) and Skyworks Solutions ( SWKS ), an MKM analyst predicted Wednesday. Shares of Broadcom, Qorvo and Skyworks were up a fraction each in early afternoon trading on the stock market today , while Apple stock was down a fraction. Last month, Apple reported March-quarter sales that missed views for the first time since 2003, undercutting chip stocks, which have broadly fallen since. The Apple report bolsters concerns of a smartphone slowdown, fresh off worries that Chinese smartphone saturation would stunt further growth. But, MKM analyst Ian Ing notes, the brimming Chinese market is still buying. Of 1,000 Chinese respondents in an MKM survey, more than 60% plan to buy a new smartphone within the next three to six months vs. less than 25% of U.S. respondents, Ing wrote in a research report. Of those in China, 38% plan to switch brands. “Chinese consumers are even more gadget-friendly relative to U.S. consumers,” Ing wrote. “Ownership is higher across smartphones, PCs and tablets in rank order.” Nearly 97% of Chinese consumers own a smartphone vs. 84% of Americans, but 25% of Chinese respondents plan to add another smartphone account — likely expanding to children and the elderly — vs. only 7.5% of Americans, Ing wrote, suggesting that Chinese users refresh their smartphones annually. Advances in wireless charging and fingerprint sensing will drive further adoption, he wrote. In smartphones, Apple, Huawei and LeTV look likely to take share from Xiaomi, Samsung and Lenovo, Ing wrote. Chinese consumers are more driven by brand (68% vs. 43% of Americans) and less by cost (33% vs. 61% of Americans). Those dramatic swings in share could affect chipmakers like Qorvo and Skyworks, which are 32% and 20% exposed to China, respectively. Ing estimates 40% of Qorvo’s mobile sales stem from China. Fellow Apple suppliers Qualcomm ( QCOM ) and Broadcom are less exposed — mid-teens and less than 10%, respectively, Ing said. “That said, Qorvo is favorably exposed to Huawei as a 10% customer,” he noted. Scalper1 News
Scalper1 News