Why might the September sales rebound be temporary?

  • China smartphone sell-through reached 19.7 million units in September, up 15% month on month, mainly driven by the iPhone 18 Pro and Pro Max, which began shipping on 18 September; sales were still down 1.5% year on year.
  • Bernstein attributed the year-on-year weakness to insufficient promotions, fading effects of government subsidies, and relatively high prices for both new and older models. Cumulative sales in the first 9 months of 2026 fell 10% year on year, and the firm expects the full-year market to decline 13.5% year on year.

How have price increases changed the market structure?

  • In September, sales of phones priced below 2000 yuan fell 43% year on year, accounting for 24% of total sales. Facing high memory costs, manufacturers cut loss-making entry-level models; mid-range phones priced at 2000–5000 yuan and high-end phones above 5000 yuan grew 25%–35% year on year, driven by new flagship launches across brands.
  • The average selling price of phones reached a record high, rising 24% month on month and 35% year on year. This reflected both the seasonal effect of new flagship launches and a higher sales share for expensive models as low-end demand shrank.
  • Bernstein expects the average selling price to fall from its September peak, but recent price increases by Apple and Huawei will keep it high: the starting price of the iPhone 18 Pro series rose by 1000 yuan, while Huawei’s Mate 80 and Nova 16 series saw similar increases. The firm expects demand to face further pressure in the fourth quarter of 2026, with risks potentially extending into 2027.

Apple and Huawei are growing; why are other brands losing momentum?

  • Apple’s China iPhone sales rose 92% month on month and 44% year on year in September, giving it a sales-volume share above Huawei’s. There were four new models in the same period last year, compared with only two this year, the Pro and Pro Max; Bernstein believes some iPhone 18 demand shifted to those two models.
  • Huawei’s sales rose 52% year on year in September, mainly from models priced at 5000–6000 yuan; sales of high-end phones above 6000 yuan were flat year on year. Two phones equipped with chips using the LogicFolding architecture have only recently launched, and the firm will monitor further sales and consumer feedback.
  • Combined sales of brands other than Apple and Huawei fell 23% year on year in September, and their share fell by 15 percentage points. Xiaomi’s sales that month fell 24% year on year, with its share dropping to 13.2%, below 15.1% in August and 17.0% in the same period a year earlier.

What signals are inventories and chip suppliers sending?

  • After adjusting channel sell-in data for obsolescence, Bernstein found that September sell-in was still slightly below sell-through, which it believes reflects manufacturers’ caution about fourth-quarter demand. Following three months of inventory drawdowns by Android brands, sell-in and sell-through moved toward balance in September; iPhone sell-through exceeded sell-in for four consecutive months, leaving inventory risk relatively low.
  • The shift toward higher-end products previously lifted upstream suppliers’ average selling prices and margins, bringing their results above Bernstein’s expectations; but continued memory price increases and pressure on end demand have made the firm wary of supply-chain adjustments from the end of 2026 through the first half of 2027.
  • MediaTek and Qualcomm’s sales-volume shares in China’s mobile chip market fell by 5 and 4 percentage points respectively in September, while Apple’s share rose. Bernstein is cautious on MediaTek’s mobile business because of its high exposure to mid- and low-end products; however, the firm believes rapid TPU revenue growth and high operating leverage can offset pressure on the mobile business, and maintains its outperform rating.