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China’s smartphone sales slowdown could hurt Apple’s bottom line, Goldman says

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Illustration by Alex Castro / The Verge

The smartphone market in China is only going to slump further, Goldman Sachs predicted in an investor note on Sunday. Sales could drop an estimated 15 percent year over year this autumn as companies like Huawei, Oppo, Vivo, and Apple struggle to find interested customers, Goldman said.

Like consumers in the US, phone owners in China often keep older models of smartphones for over a year and don’t trade in their phones for the latest model, contributing to the weak sales numbers. Goldman analyst Rod Hall predicts Apple will sell 13 million iPhones in China during the holiday season, or 3 percent less than last year.

During the Golden Week in China this October, a week where many employees get time off to travel and recuperate and where retail business often rises, many smartphone shops in Guangzhou, a major southern city, still remained half full or empty. Shop clerks stood by the entrances in pairs, their eyes flickering around for potential customers.

Smartphone shipments in China saw a big decline this year, after several years of positive growth. Analysts from Canalys said earlier that vendors are imitating each others’ products and marketing strategies in a bid to stay on top of the competition.

Hall said that there are “multiple signs of rapidly slowing consumer demand in China which we believe could easily affect Apple’s demand there this fall.” Still, consumers in China might be interested in the iPhone XS Max and XR’s larger screens, which could potentially offset the negative predictions. After all, larger screens would make gaming more convenient, and the number of Chinese mobile gamers has gone up exponentially over time.