CEO of smartphone chip supplier says iPhone will continue to outperform in China

NXP Semiconductors makes near-field communications (NFC) chips for smartphones that are used to allow handsets to offer mobile payment features. The company's Chief Executive Officer, Kurt Sievers, told Reuters that China's smartphone business continues to slump although one non-Android customer continues to order chips at a pace equivalent to past years. The executive didn't mention the company by name, but most analysts believe he was referring to Apple.

China is the largest smartphone market in the world followed by India and the U.S. While Counterpoint Research notes that smartphone sales declined 8% during last month's "618" holiday (the second largest online shopping festival in the country after Singles' Day in November), sales of the iPhone in China rose 8% during the shopping holiday. And a forecast made by NXP indicates that the iPhone's upward trend in China will continue.

NXP's Sievers says that the company's third-quarter smartphone revenue will rise 23% compared to the second quarter when the unit generated $284 million in sales. Most of that forecast 23% increase comes from one large customer that Sievers did not name which again is believed to be Apple. The executive said, "This increase in itself sequentially from Q2 to Q3 is quite good. We also compare that seasonally to past years or to more normal years. And I'd say that the sequential increase for that particular customer is on the better side."

You might recall that back in 2016 Qualcomm offered to buy NXP for $110 a share and then hiked that bid to $127.50 or $44 billion. However, the deal required one last country to give regulatory approval and that was China. Eventually, Qualcomm walked away from the proposed transaction.

During the first quarter of this year, Apple had a leading 19.9% share of the Chinese smartphone market followed by Oppo (18.3%), Vivo (17.7%), Honor (14.8%), and Xiaomi (13.6%). Apple and Huawei (9,2%) were the only brands to show year-over-year improvements in market share during the January-April period. Apple's slice of the smartphone pie in China rose from 17.9% to 19.9% while Huawei rebounded from a 6.2% share during last year's first quarter to take 9.2% of the market during the first three months of this year.