Cantor Fitzgerald analyst Brian White has been touring China and Taiwan this week, and filing reports on what he’s hearing.
Today, he has some bad news for Apple (and Samsung):
During today’s discussions, we walked away with the clear message that the momentum remains with the China-based smartphone vendors, including Lenovo, Huawei, ZTE, Coolpad, and Xiaomi. The tone around Xiaomi was even more positive than in past trips, while Coolpad seems to be the most aggressive around pricing.
We believe the momentum at the China-based brands is increasingly impacting Samsung, while Apple has already been struggling over the past 12-18 months. In the near term, we sensed disappointment around demand for the iPhone 5S.
That said, we heard great enthusiasm around the potential for Apple to introduce a larger iPhone form factor in China this year with the iPhone 6. In our view, the iPhone 6 with a larger screen (e.g., 4.7-inch, 5.5-inch) has the potential to meaningfully accelerate Apple’s growth trajectory in China during 2H:14. We have not heard this type of excitement in China around the iPhone in at least two years and thus we believe this could be a very special iPhone launch for Apple.
White is an Apple bull. He rates the stock a buy and has a $US777 price target.