Apple Inc.'s (AAPL) Manufacturer Foxconn Technology Co., Ltd. (2354) Ships 1.4 Million IPhone 5S Ahead Of China Mobile (CHL) Launch

 @SophieXSong
on January 14 2014 12:07 PM
Apple China Mobile
A worker cleans glass in front of an iPhone 5c advertisement at an Apple Store in Kunming, Yunnan province. Reuters/Wong Campion

Apple Inc.'s (Nasdaq:AAPL) long-time manufacturer Foxconn Technology Co., Ltd. (TPE:2354) has shipped about 1.4 million units of iPhone 5S to China Mobile (NYSE:CHL), ahead of the Chinese carrier’s iPhone launch on Friday.

 “Shipping one million or more iPhones to a single carrier per month is substantial. But we have limited visibility beyond this month as Apple hasn’t informed Foxconn of the volume for the next shipment to China Mobile,” said a person familiar with the matter, according to the Wall Street Journal.

After the much hyped Apple-China Mobile deal was finalized, China Mobile began to take preorders for iPhones on Dec. 25.

Analysts initially expected Apple to ship between 15 and 25 million new iPhones through China Mobile’s distribution channels alone in 2014, but the actual number might be closer to Morgan Stanley’s estimate of 12 million new units, though some analysts expected sales could be as low as five million. The initial shipment volume does not represent the total number of iPhones the carrier has sold so far, but does provide a gauge for the success of the partnership so far, the Wall Street Journal reported on Tuesday.

“[Apple’s] average monthly iPhones sales in China is only about two million,” said Gartner analyst Sandy Shen, pointing out the significance of shipping more than half of that sales figure to a single carrier. Both China Unicom Limited (NYSE:CHU) and China Telecom Corporation Limited (NYSE:CHA), China’s mobile competitors, have been carrying the iPhone 5S since last September.

Even before the deal with China Mobile, Apple’s business has been growing in China. According to Garner, Apple sold 18.5 million iPhones in China in the first three quarters of 2013, a 28 percent year-on-year increase. In October, Apple’s share of the Chinese smartphone market leaped to 12 percent, making the company the third biggest smartphone company in China, compared to just 3 percent a month before.

Apple is keen on pushing its advantage, and has the potential to catch up with its main competitors Samsung Electronics Co., Ltd. (KRX:005930), which has 21 percent of the Chinese market, and Lenovo Group Limited (HKG:0992), with 13 percent of the market, this year. Last week, Apple opened its fourth flagship store in Beijing, and debuted an official retail page on Alibaba’s Tmall.com, a brand name online retailer.  

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