Apple’s (NASDAQ:AAPL) iPhone continues to outperform Android competitors in China even as overall smartphone shipments decline, with Android brands facing rising inventory levels and increasing prices, according to a Jefferies report citing February data from China’s Ministry of Industry and Information Technology (MIIT).
Total smartphone shipments in China dropped 12.6% year-on-year in February after a roughly 16% decline in January. When adjusting for the timing of the Chinese New Year, combined shipments for January and February were down 14.3%. Domestic Android brands recorded a 12.1% drop, while foreign brands — effectively Apple’s iPhone — saw shipments fall 25.7%.
Despite the sharper decline in iPhone shipments, inventory trends between the two ecosystems are diverging. Inventory days for Android devices have increased by an estimated 8.4 days over a six-month rolling period, while iPhone inventory days have declined by about 7.4 days, indicating stronger consumer demand for Apple’s products.
Industry checks referenced in the report suggest that iPhone sales in China grew nearly 20% year-on-year during the first quarter of 2026, with growth in March exceeding 20%.
Jefferies analysts attributed the momentum partly to Apple’s pricing strategy. The base iPhone 17 with 256GB of storage is priced the same as the previous generation but offers double the storage capacity, while the newly released iPhone 17e 256GB model carries the same price as the 16e while also doubling storage.
“We believe aggressive pricing of the 17e is a strong indication that Apple would like to grow its iOS user base and gain share, in order to grow its service and future AI revenue, as well as maintain supply chain bargaining power,” analysts led by Edison Lee wrote.
They added that Apple may rely on higher shipment volumes in 2026 to offset margin pressure caused by sharply rising memory costs.
The outlook for Android manufacturers appears more challenging. Memory prices jumped about 75% quarter-on-quarter in the first quarter of 2026, prompting Chinese Android brands to begin passing those higher costs on to consumers through increased launch prices.
Recent devices from OnePlus and iQOO launched with price increases averaging about 28% and roughly 30%, respectively, compared with their previous models. Analysts warned that additional price increases may follow, noting that many of the current hikes reflect memory costs from the fourth quarter of 2025 rather than the more recent surge.
“Sellthrough could weaken further, which will drag shipment even more given high inventories,” the team warns. Smaller Android manufacturers could face additional pressure, with some potentially forced to reduce production if they are unable to secure sufficient memory supply, they added.
Jefferies said it continues to favor companies within the iPhone supply chain over those tied to the Android ecosystem.