Do These Numbers Bode Poorly for China's Smartphone Market?

Reports out of several important players in the Chinese smartphone space showed concerning numbers this week, an indication to some investors that demand in the Chinese smartphone market might be lagging.

One of the largest Chinese smartphone manufacturers, Xiaomi, missed a $1 billion target for internet service and handset revenue in 2015.

Internal Xiaomi documents reveal that the company's internet service division saw a 150 percent increase in revenue from last year, according to reporting by Reuters on Wednesday. However, that increase only brought home $563 million in revenue, little more than half of the $1 billion target. Xiaomi sold 70 million phones in 2015, Forbes reported in January.

Xiaomi proved itself to be a Pacific powerhouse last year in its second round of funding, when it raised $1.1 billion on a $45 billion valuation. That $45 billion represents more than a 1,000 percent increase on its last valuation of $4 billion off $216 million in funding in 2012.

News of Xiaomi's short performance comes as Apple Inc.AAPL announced its first-ever slump in smartphone sales and revealed it had missed shipment targets in its top product categories: iPhones, iPads and iMacs. Apple also came in $790 million short of its 2015 revenue target. Underwhelming performance from two of the world's top smartphone companies might cast doubt on the smartphone market's ability to maintain growth.

Many Apple suppliers adjusted earnings figures and missed revenue targets in fourth-quarter filings released in late January. SK Hynix Inc (KRX: 000660), to name one, missed analyst profit projections in a report released Tuesday, according to Bloomberg. Investors initially reacted favorably to the news, pushing the stock to a weekly high of 28,800, but eventually shares tumbled by 4 percent at time of writing.

Apple supplier Skyworks Solutions Inc SWKS was trending down on Wednesday's smartphone news, losing 2.4 percent since open at time of writing.

Some Wall Street analysts saw silver linings among the news, however. "We think China OEMs are faring better than feared," said MKM executive director Ian Ing in a note released Wednesday. Ing pointed to Spreadtrum, a Samsung chip supplier, and noted that they had potential to double shipments of particular chipsets this year.

Benzinga reached out to Xaomi for comment and had not received a response at time of writing.

Is Downside In Store For Peers?

Here are a handful of Apple supplier stocks to keep an eye on as the market learns more about smartphone companies' fourth-quarter performances and 2016 projections. If history repeats itself, we might continue to see instability in the market. However, 

• Foxconn Technology Co Ltd (TPE:2354)

• Western Digital CorpWDC

• QUALCOMM, Inc.QCOM

• Analog Devices, Inc.ADI

• Diodes IncorporatedDIOD

• Avago Technologies LtdAVGO

• Fairchild Semiconductor Intl IncFCS

• Intel CorporationINTC

• Jabil Circuit, Inc.JBL