BEIJING — People flocked to a flagship Apple store in downtown Beijing on Friday morning to pick up the latest iPhone, despite market worries that nationalistic fervor would dampen the U.S. company’s sales in China.
Many also ordered the phone for delivery. As of 10 a.m. Beijing time on Friday, iPhone 15 sales via JD’s Dada one-hour delivery app surged by 253% versus that of the iPhone 14 last year, Dada said.
In the first 10 minutes after deliveries began at 8 a.m., the company said 25,000 phones were on their way to customers. Dada said this year it is working with 4,600 authorized Apple retailers in China — up from 500 in 2020.
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Apple started delivering the iPhone 15 on Friday after pre-orders began on Sept. 15. This year’s release comes as the smartphone giant faces economic and political headwinds in its third-largest market.
About two weeks prior to Apple’s launch event this month, Chinese telecommunications giant Huawei quietly released its Mate 60 Pro in China with a reportedly 5G-capable chip from SMIC. That’s despite U.S. sanctions since 2019 which have almost wiped out Huawei’s smartphone business.
However, for people waiting in line at the Apple store, there was a general ambivalence about the phone brand.
One man, surnamed Zhao, said he’d wanted to buy Huawei’s new phone, but it sold out the moment he tried to buy it online. “Since I couldn’t get the Mate 60 I decided to get the new iPhone instead,” he said in Mandarin, translated by CNBC. “I don’t think there’s too much of a difference.”
I don’t feel it’s patriotic to get one brand or another. Don’t Huawei and Apple both pay taxes to China?
Zhao
IPHONE BUYER IN CHINA
Zhao declined to share his first name due to the sensitivity of the matter. He was 10th in line at the Apple store in Sanlitun, Beijing, and said he arrived at 6:30 a.m. The first person in line, who also requested anonymity, said he’d arrived at 1 a.m.
Huawei’s phone might slow down in about two to three years, while Apple’s system might last a bit longer — maybe four to five years, according to Zhao. “But I’m going to change to a new phone in two to three years anyway, so it’s about the same to me.”
“I don’t feel it’s patriotic to get one brand or another. Don’t Huawei and Apple both pay taxes to China? Apple probably pays more,” he said. Zhao said he was planning to upgrade from his Huawei device to buy the iPhone 15 Pro Max, which has a list price of 9,999 yuan ($1,370).
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In early September, The Wall Street Journal reported, citing sources familiar with the matter, that central government employees were ordered not to bring iPhones to the office or use them for work. It was not clear how new or wide-reaching any such order was.Bloomberg, citing sources familiar with the situation, also reported a ban on iPhones at work could spread to other state-affiliated agencies.
China’s Ministry of Foreign Affairs said the country hadn’t issued bans on the purchase or use of Apple iPhones.
Based on the current pre-ordering results, we do see that Apple will still be resilient in its sales, though it faces challenges…
Will Wong
SENIOR RESEARCHER AT IDC
Apple did not immediately respond to a CNBC request for comment on the reports or its iPhone 15 sales in China.
Shares of Apple, the largest U.S. stock by market capitalization, are down by about 7% so far this month.
Strong iPhone 15 pre-sales
Apples’ iPhone 15 pre-sales in China pointed to robust demand. Earlier this week, CNBC checks of online shopping sites JD.com and Alibaba’s Tmall showed the more expensive iPhone 15 Pro and Pro Max were essentially sold out, with delivery wait times of about a month or more.
“Based on the current pre-ordering results, we do see that Apple will still be resilient in its sales, though it faces challenges like Huawei’s new products and the absence of the usual buzz on China’s social media,” said Will Wong, senior researcher at IDC, a market research firm.
“We are expecting a 5%-6% YoY growth for Apple’s overall shipments” in China in the second half of this year, he said. However, he noted pre-order results don’t necessarily represent the final sales number and that last year, China was still dealing with Covid-19.
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Consumers living outside big cities such as Beijing, Shanghai and Hangzhou also wanted to buy the new iPhone. Orders from less developed cities surged by six times versus last year, according to Dada.
Apple’s China headwinds
China accounts for nearly 20% of Apple’s revenue. The company’s Greater China net sales rose by nearly 8% year-on-year to $15.76 billion in the second quarter, versus a 5.6% decline in the Americas market to $35.38 billion.
That’s despite economic data that’s pointed to a broader slowdown. China’s retail sales rose by 4.6% in August from a year ago, following 2.5% growth in July.
On top of slowing growth in China, the market is highly competitive.
Huawei is set to hold a product launch on Monday. Foldables, a category Apple has yet to enter, have also grown popular in China.
Counterpoint Research’s most optimistic outlook for Apple in China predicts a 4% year-on-year decline in Apple iPhone shipments in the fourth quarter.
The firm’s worst-case scenario predicts a 15% year-on-year decline.
“We must acknowledge the existence of initial supply constraints, particularly for the Pro series. This has manifested in longer delivery times for pre-orders over the past two days,” Tarun Pathak, research director at Counterpoint Technology Market Research, said in an email Wednesday.
“If these supply issues persist without a prompt resolution, it would necessitate us leaning towards the bearish case.”
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Pathak noted that Huawei’s decline allowed the iPhone to “attract a massive number of consumers” in the $600-plus price category, and said iPhone 11 and iPhone 12 users would likely want to upgrade to the iPhone 15.
The firm said iPhone 15 pre-sales on JD.com exceeded 3 million units.
JD.com did not immediately respond to a CNBC request for comment.
However, Shanghai-based CINNO Research had a more pessimistic outlook as of Wednesday: A 22% drop in overall iPhone 15 unit sales versus that of the iPhone 14 in China.
That’s still about 10 million iPhone 15s, for an expected total of 45.5 million iPhones sold in China this year, a 2% decline from a year ago, CINNO Research said.
CINNO blamed this on the “economic downturn” and impact of Huawei’s new Mate 60 Pro. Indeed, there has been a lot of focus on Huawei’s latest device. At its height, the Chinese technology giant was Apple’s closest competitor in China’s high-end smartphone market. Any kind of serious bid from Huawei to regain a foothold in China could add pressure on China.
“There’s no doubt that the new Mate 60 series will be a challenge to the iPhone this year,” Counterpoint Research’s Pathak said.
The market is currently in a news-driven environment where the prices of cryptocurrencies have been determined by news agenda rather than fundamentals.
Bitfinex analysts have warned crypto investors to be cautious as bitcoin’s (BTC) recovery over the weekend is not a sign that its correction is over; the asset could witness more bloodshed in the near term.
In the latest Bitfinex Alpha report, experts deemed the market’s reaction this week critical, especially as supply alleviated over the weekend could return when traditional markets open.
“No Man’s Land”
Since Saturday, bitcoin has risen almost 10% from $57,600 to $63,000, closing last week in the green. The asset has surged above the 125-day range low of $60,200, which it broke through earlier this month after news of the German government’s massive BTC selling hit the market.
Market sentiment began to improve after reports that wallets linked to the German government were almost empty. However, the positive sentiment may not be sustained for long as the BTC the German authorities moved to trading desks and exchanges are yet to be sold.
While the supply from Germany appears to have been factored into bitcoin’s market price, Bitfinex analysts believe the end of selling pressure depends on how the involved trading desks execute their trades in the coming days.
Although the shift in sentiment underscores the market’s capacity to integrate new information and adjust expectations quickly, analysts think the market’s reaction over the first two trading days of the week cannot be overlooked for two reasons.
First, the low support level in the $60,200 range has now become a potential resistance line. Second, trading patterns over the past three months suggest that weekends are usually favorable for markets, especially on Saturdays when supply pressure seems to subside.
“We are now in no man’s land until we get clear resolution above or below this level,” the analysts said.
A News-Driven Environment
Besides the potential resistance level and three-month weekend trading pattern, the market is currently in a news-driven environment, where the prices of cryptocurrencies have been determined by news agendas rather than fundamentals.
Since selling pressure concerns are not yet completely obsolete due to upcoming Mt Gox creditor distributions, Bitfinex analysts expect such headlines to continue to have some impact on price movements. As such, the analysts urged investors to exercise caution in their trading strategies.
BlackRock’s IBIT led with $117.25 million in inflows on July 15, also being the most traded Bitcoin ETF.
The US spot Bitcoin ETFs recorded a daily net inflow of $301 million on July 15th. This extended their winning streak to seven consecutive days amidst a broader market recovery.
None of the ETFs recorded outflows for the day.
Bitcoin ETFs Rake in $16.11B in Net Inflows Since Jan
According to the data compiled by SoSoValue, BlackRock’s IBIT, the top spot Bitcoin ETF by net asset value, recorded the largest net inflows of the day at $117.25 million. IBIT was also the most actively traded Bitcoin ETF on Monday, with a volume of $1.24 billion. Ark Invest and 21Shares’ ARKB came in close behind with net inflows of $117.19 million.
Fidelity’s FBTC experienced net inflows of $36.15 million on Monday, while Bitwise’s BITB saw $15.24 million in inflows. VanEck’s HODL, Invesco and Galaxy Digital’s BTCO, and Franklin Templeton’s EZBC funds also recorded net inflows. Meanwhile, Grayscale’s GBTC and other ETFs, such as Valkyrie’s BRRR, WisdomTree’s BTCW, and Hashdex’s DEFI, registered no flows for the day.
A total of $2.26 billion was traded on Monday. The trading volume for these ETFs was less than in March when it exceeded $8 billion on some days. Meanwhile, these funds have collectively attracted $16.11 billion in net inflow since their January launch.
What’s Next For Bitcoin?
Earlier this month, bitcoin’s price decline was mainly due to fears of massive selling pressure from Mt. Gox and the German government’s BTC sales.
But the assassination attempt on pro-crypto former US President and presumptive Republican candidate Donald Trump at Saturday’s rally seemed to spark a recovery in the world’s largest digital asset, and experts are bullish on the asset’s price trajectory going forward. Bitcoin surged more than 9% over the past week and was currently trading slightly below $64,000.
Veteran trader Peter Brandt discussed bitcoin’s price outlook, suggesting a potential major rally. He referred to a pattern he terms “Hump->Slump->Bump->Dump->Pump” and highlighted that the July 5 double top attempt was a bear trap, confirmed by the July 13 close. He sees a likely continued upward trend but warned that a close below $56,000 would negate this bullish view.
“Bitcoin $BTC could be unfolding its often-repeated Hump…Slump…Bump…Dump…Pump chart construction. Jul 5 attempt at the double top was a bear trap, confirmed by Jul 13 close. Most likely scenario now is that bears are trapped. Close below $56k negates this interpretation”
PeckShield alert reveals LI.FI’s protocol vulnerability is similar to a March 2022 attack, with the same bug recurring.
The decentralized finance (DeFi) platform LI.FI protocol has suffered an exploit amounting to over $8 million.
Cyvers Alerts reported detecting suspicious transactions within the LI.FI cross-chain transaction aggregator.
LI.FI Issues Warning After $8 Million Exploit
LI.FI confirmed the breach in a statement on July 16 via X: “Please do not interact with any http://LI.FI powered applications for now! We’re investigating a potential exploit.” The team clarified that users who did not set infinite approval are not at risk, emphasizing that only those who manually set infinite approvals seem to be affected.
According to Cyvers Alerts, more than $8 million in user funds have been stolen, with the majority being stablecoins. According to on-chain data, the hacker’s wallet holds 1,715 Ether (ETH) valued at $5.8 million and USDC, USDT, and DAI stablecoins.
Cyvers Alerts advised users to revoke relevant authorizations immediately, noting that the attacker is actively converting USDC and USDT into ETH.
Crypto security firm Decurity provided insights into the exploit, stating that it involves the LI.FI bridge. “The root cause is a possibility of an arbitrary call with user-controlled data via depositToGasZipERC20() in GasZipFacet, which was deployed 5 days ago,” Decurity explained on X.
“In general, the risks behind routers, cross-chain swaps, etc. are about token approvals. Raw native assets like (unwrapped) ETH are safe from these kinds of hacks b/c they don’t have approvals as an option. Most users & wallets also no longer do “infinite approvals” which gives a smart contract total control on removing any amount of their tokens. It’s important to understand which tokens you’re approving to which contracts.
This dashboard looks for all transactions of a user that intersects Lifi. Not all of these transactions indicate risk- but you can see how, broadly, integrations & layers of tech (like how Metamask bridge uses Lifi on BSC) can complicate how users do or don’t put their assets at risk. Revoke Cash is the most well known approval manager app.
But it’s also good security practice to simply rotate your address. New addresses start with 0 approvals, so starting fresh by moving your tokens to a fresh address is another good security practice.” – commented Carlos Mercado, Data Scientist at Flipside Crypto.
Recent Exploit Mirrors March 2022 Attack
Further analysis by PeckShield alert revealed that the vulnerability is similar to a previous attack on LI.FI’s protocol that occurred on March 20, 2022. That incident saw a bad actor exploit LI.FI’s smart contract, specifically the swapping feature, before bridging.
The attacker manipulated the system to call token contracts directly within their contract’s context, making users who had given infinite approval vulnerable. This exploit resulted in the theft of approximately 205 ETH from 29 wallets, affecting tokens such as USDC, MATIC, RPL, GNO, USDT, MVI, AUDIO, AAVE, JRT, and DAI.
“The bug is basically the same. Are we learning anything from the past lesson(s)?” PeckShield Alert said in a July 16 X post.
Following the 2022 incident, LI.FI disabled all swap methods in its smart contract and worked on developing a fix to prevent future vulnerabilities. However, the recurrence of a similar exploit raises concerns about the platform’s security measures and whether adequate steps were taken to address the vulnerabilities identified in the previous breach.
LI.FI is a liquidity aggregation protocol that allows users to trade across various blockchains, venues, and bridges.
