News Briefing
In an effort to stimulate domestic consumption, the Chinese government has expanded its "Trade-In for Upgrades" program—originally focused on home appliances and automobiles—to include smartphones, tablets, and smartwatches. The program, which was initially set to end in late 2024, now aims to boost demand for personal mobile devices.

Impact Analysis
1. Short-Term Sales Boost but Uncertain Long-Term Effects
     Under the subsidy program, consumers purchasing products priced below 6,000 RMB are eligible for a 15% subsidy, with a maximum discount of 500 RMB per item. To align with the program’s requirements, several smartphone models, including the iPhone 15 and 16 Plus, have already seen price reductions. This initiative marks the most extensive consumer subsidy campaign since 2007–2013. Drawing from previous home appliance and automotive subsidies, the policy is expected to generate a short-term boost in mobile device sales. However, if China’s broader economic outlook remains weak, the temporary sales surge could cannibalize future demand, potentially dampening smartphone sales in the latter half of the year. Given China's status as a critical smartphone market, the overall economic climate remains the key determinant of whether this policy will provide lasting benefits.

2. Chinese Brands to Benefit More Than Apple
     Despite Apple's participation in price reductions, Chinese smartphone brands are expected to be the primary beneficiaries of the subsidy program, given their dominance in the price range eligible for subsidies. If China's economic conditions deteriorate, the pull-forward effect of consumer spending could negatively impact iPhone sales in the second half of the year. To counter this, Apple may need to introduce more compelling product or pricing strategies to revive its declining performance in the Chinese market. Conversely, if economic conditions improve, iPhone sales should remain stable or even benefit from increased consumer confidence on an annual basis.
3. Intensified Competition in a Saturated Market
     Overall, the mobile device market is facing intensified competition due to limited growth drivers and market saturation. For Taiwanese PCB manufacturers, a significant portion of their business is tied to the mobile sector. Given the increasing risks of market overconcentration and customer dependency, Taiwanese suppliers are advised to diversify into emerging applications such as AI Edge computing to reduce reliance on the smartphone industry and mitigate risks associated with single-client dependency.