Apple iPhone 16 faces 'formidable' competitor in Huawei: Analyst

Just after Apple (AAPL) unveiled the new iPhone 16 on Monday, Huawei Technologies, a Chinese phone maker, announced a new trifold device. Bank of America senior IT hardware analyst Wamsi Mohan joined Seana Smith and Brad Smith to discuss how the new Huawei phone could affect competition in the China region.

Huawei "is a formidable competitor" to Apple amid increased competition in the China market, Mohan tells Yahoo Finance. Mohan argues the combination of Apple Intelligence and competition from the new Huawei device is "relatively net neutral" for Apple in the country, highlighting that the iPhone maker said support for Apple Intelligence in the Chinese language is coming in 2025.

"Apple will continue to take share in China in the long run," Mohan said. Apple is "giving up some cyclical share" in the near term, he noted, adding that Bank of America analysts are "very optimistic about the China potential" in the long term as the middle class grows in the region. "All of that is going to add incremental users into the Apple ecosystem."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Naomi Buchanan.

Video transcript

Well, we also got an announcement uh from Huawei just after Apple's event, they held their own.

They have that brand new phone.

Lots of excitement surrounding that.

We know that Apple has faced some challenges within China.

I'm curious from a competition perspective, how big of a headwind is that a larger headwind that may be what has already been factored in?

Yeah.

No, it's a great question.

Look.

I mean, um Huawei obviously in China is a formidable man.

Uh when when us sanctions went into place uh back in uh you know, 56 years ago, five years ago, uh what you really saw was uh the China market was shrinking in absolute terms from a smartphone market perspective.

Uh and Apple was taking share over there and the share gains came because there was no other true alternative of a high end phone.

And so we estimate about 15 to 20 million uh Chinese smartphone switch uh to Apple over that period of time.

And now Huawei is coming back with uh a product, obviously, the volumes of this product are still a little unknown, right?

It's going to be challenging because there are a lot of constraints on on their chip manufacturing facility um abilities and, and I think what that does ultimately is constrain the total amount of volume and the performance that you can get if you're not at the leading edge of the product.

We also heard something interesting from Apple yesterday, which was uh they mentioned that support for the Chinese language was coming in 2025.

So that might be an indication that Apple Intelligence actually does get rolled out in 2025.

So the combination of Apple Intelligence rolling out and the fact that you are going to uh yeah, give up some share with, with respect to Huawei that you took over the last five years.

The combination of those two is relatively net neutral.

We think that Apple will continue to take share in China in the long run.

Uh Obviously, you're giving up some cyclical share that you took over the last few years in the very near term, longer term where we're actually very optimistic about the China potential because the middle class is actually increasing a fairly significant amount in emerging markets.

And in China and all of that is going to add incremental users into the Apple ecosystem.

All right, we'll see if they have to launch a TRD phone to be able to compete as well.

Even furthermore, uh WSI, thanks so much for taking the time here with us, Wam Zi Mohan, who is the Bank of America Senior it.

Hardware analyst.

Appreciate the time.