Far East Still Growing, Set For Apple Inc. (AAPL) To Take Advantage

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Editor’s Note: Related tickers: Apple Inc. (NASDAQ:AAPL), China Unicom (Hong Kong) Limited (NYSE:CHU), China Telecom Corporation Limited (ADR) (NYSE:CHA), China Mobile Ltd. (ADR) (NYSE:CHL), Google Inc (NASDAQ:GOOG)

To say that Apple Inc. (NASDAQ:AAPL) considers China to be one of its biggest markets is no surprise. In fact, CEO Tim Cook has stated in the past that China could be the company’s principalrevenue-driverat some point in the future.

Apple Inc. (AAPL), Amazon.com Inc. (AMZN), Barnes & Noble Inc. (BKS)

China’s telecom trio

Whether or not Apple continues to make progress in this country remains to be seen. Right now, Cupertino is moving in the right direction with its China Unicom (Hong Kong) Limited (NYSE:CHU) and China Telecom Corporation Limited (ADR) (NYSE:CHA) partnerships, which are the second and third largest telecom carriers in China, respectively.

China Mobile Ltd. (ADR) (NYSE:CHL) still represents the proverbial uncaught whale, however, as it’s China’s and the world’s largest telecom operator with over 700 million subscribers. This total represents a little over twice the number of subscribers held by China Unicom (Hong Kong) Limited (NYSE:CHU) and China Telecom Corporation Limited (ADR) (NYSE:CHA) combined. China Mobile Ltd. (ADR) (NYSE:CHL) also sports the quickest 3G-subscriber growth in the country, according to BGR.

As has been the case for the past few years, China Mobile Ltd. (ADR) (NYSE:CHL) and Apple Inc. (NASDAQ:AAPL) are still in negotiations over a deal that would bring the iPhone to the telecom’s customers, and there’s no use speculating on the possibility of a deal here.

We’ll share this article with you if you have time to read it. It covers the situation quite nicely, but it boils down to the fact that CEO Li Yue and China Mobile Ltd. (ADR) (NYSE:CHL) want a bigger piece of Apple Inc. (NASDAQ:AAPL)’s revenue pie than it’s willing to give, particularly regarding iTunes revenue.

China Unicom (Hong Kong) Limited (NYSE:CHU) and China Telecom Corporation Limited (ADR) (NYSE:CHA) sport more Cupertino-friendly contracts, which makes sense given their lack of market positioning against the larger China Mobile Ltd. (ADR) (NYSE:CHL).

Market share

Moving on, when you combine this telecom potential with a smartphone market at large that is growing by leaps and bounds, the sky is the limit.

Digitimes recently touched on a yet to be published report by IDC, stating the following:

“China’s mobile phone shipments registered at 97 million units in the first quarter of 2013, up 15% compared with the same period in 2012, while China’s smartphone shipments totaled 78 million units in the first quarter, a growth of 117% compared with the same period in 2012.”

When you look at those numbers, it is easy to see that Apple Inc. (NASDAQ:AAPL) is in good position to take advantage. The China smartphone market is growing fast, with more than 100 percent growth when compared to the same period of last year.

Along with a China Mobile Ltd. (ADR) (NYSE:CHL) deal, it would be interesting to see what a lower priced iPhone would be able to bring to the company in terms of sales in China, but it’s important to note that existing sales are solid. Here’s another tidbit from the Digitimes piece:

“In the first quarter, Apple ranked the fifth with a market share of 9% and a link relative ratio of 21%. The shipments of iPhone 4 (8GB), which is an excellent performer, grew by 211% over the previous quarter.”

Obviously, Apple Inc. (NASDAQ:AAPL) is growing its market share in China but it’s far from the top spot; right now, Samsung continues to rank number one in China with a market share of 19%. There’s another country in this region worth watching too, though, that may surprise you. This time it’s on the tablet side of things.

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