Apple’s iPhone Sales Dip in China Amid Rising Competition from Huawei

Apple's iPhone Sales Dip in China Amid Rising Competition from Huawei

The final quarter of 2023 brought some challenging news for Apple in China. The American tech giant saw its iPhone shipments in the country decrease by 2.1% compared to the same period the previous year. This downturn is largely attributed to the fierce competition from local rivals, notably Huawei. Research from IDC, a well-known research firm, confirmed this trend on Thursday.

The decline in Apple’s market presence in China, its third largest market, comes amid a backdrop of increasingly tough competition. Some Chinese companies and government agencies have started limiting the use of Apple devices among their employees. This move seems to echo the restrictions the US government has placed on Chinese apps, citing security concerns.

Earlier in the month, in a move uncharacteristic for the company, Apple resorted to offering significant discounts on its iPhones. They slashed retail prices by up to 500 yuan (about $70), signaling the growing pressure they face in the market.

Huawei’s Resurgence

Huawei, once hit hard by US sanctions, has made a surprising comeback. Last year, they introduced new smartphone models, shaking up the market dynamics in China, which is the world’s largest smartphone market. However, this market saw only a modest overall growth of 1.2% in the last quarter of 2023.

IDC’s data revealed an impressive 36.2% increase in Huawei’s shipments in the final quarter of the year. This surge has positioned Huawei as the fourth largest smartphone vendor in China during this period, boosting its market share from 10.3% to 13.9% compared to the same quarter the previous year.

Apple’s Market Position and Future Predictions

Despite the setbacks in the final quarter, Apple had a notable achievement for the entire year of 2023. The company surpassed Vivo, becoming the top smartphone seller in China with a 17.3% market share. This was a landmark moment for Apple, marking their first time at the top in the Chinese market. However, industry analysts warn that Apple’s sales might face challenges again in the coming year.

IDC highlighted that Apple’s high-end market share in China is under threat due to competitive products from rivals and limited innovation in Apple’s recent product offerings. Despite these challenges, Apple managed to sustain demand through significant discounts and promotions via third-party distributors.

Analysts from Jefferies predict a continued downward trend for Apple in 2024, with shipment volumes expected to decline by double digits. Conversely, Huawei’s market share is expected to strengthen. Their projections suggest that Huawei could ship around 64 million smartphones globally in 2024, a significant jump from less than 35 million units in 2023.

The overall shipment volume in China’s smartphone market was 73.63 million units in the last quarter of 2023. For the entire year, the volume reached 271 million units, representing a 5% decrease from the previous year. Apple is set to release its quarterly results next week, which will provide further insights into its performance and future prospects in the Chinese market.