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Apple chip supplier says China's smartphone market is picking up

Key Points
  • In an interview on CNBC's "Squawk Box Europe" Thursday, Dialog Semiconductor CEO Jalal Bagherli expressed optimism in his outlook for the Chinese mobile phone market.
  • Bagherli said there is a shift in market share taking place among the major smartphone sellers in China, with Huawei and Xiaomi "exhibiting much higher growth than others."
  • Dialog signed a $600 million licensing deal with Apple last year.
VIDEO4:1804:18
Huawei, Xiaomi exhibiting much higher growth in China, Dialog CEO says

China's smartphone market is set to rebound after a soft first-quarter, according to the CEO of Apple supplier Dialog Semiconductor.

In an interview on CNBC's "Squawk Box Europe" Thursday, Dialog CEO Jalal Bagherli expressed optimism in his outlook for the Chinese mobile phone market, echoing recent remarks by Apple CEO Tim Cook.

"The market for mobile phones was pretty soft particularly in China in Q1, but I think from late Q1 and going forward it has started to pick up," he said.

Smartphone shipments in China declined 3 percent in the first quarter of the year to the lowest level since 2013, according to recent data from research firm Canalys.

Apple lowered its revenue guidance in January citing weak demand from Chinese consumers, but last week CEO Tim Cook said sales were starting to improve, in part thanks to stimulus measures coming from Beijing. While Apple's smartphone shipments declined 30 percent year-on-year in China in Q1, Chinese tech firm Huawei's shipments surged 41 percent in that period, according to Canalys.

Bagherli said there is a shift in market share taking place among the major smartphone sellers in China, with Huawei and Xiaomi "exhibiting much higher growth than others."

"The overall market remains large but I don't think anyone should expect huge growth until 5G really kicks in which will be probably a year to 18 months from now," he added.

Dialog signed a $600 million licensing deal with Apple last year. In its first-quarter earnings report Thursday, the Anglo-German chip designer reported a cash windfall of the agreement and said more than 300 of its employees now work for Apple. The company added its business with Apple not covered by the recent deal reached $46 million in the first quarter, up 92 percent compared to a year ago.

"That gives a sign of our strong partnership with Apple going forward," Bagherli said.

Dialog shares were flat in early trading Thursday but are up more than 60 percent since the start of the year. The broader European chip sector was under pressure amid rising trade tensions between the U.S. and China and a modest profit outlook from U.S. tech giant Intel.

— Reuters contributed reporting

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