iPhone Sales in China May Plummet

Apple's Struggle in China

Image Credit: Fan Jianlei

Reported by Interface News Journalist | Wu Yangyu

Edited by Interface News Editor | Song Jiannan

Apple’s surge in acquiring high-end smartphone users in China from Huawei in recent years is likely to see a reversal.

A recent report by Edison Lee and his team of analysts at American investment bank Jefferies indicates that Apple’s latest iPhone series had a slow start in China last year. Sales dropped by about 30% compared to the previous year, with a double-digit decline projected for 2024.

Apple’s anxiety is heightened by the growth of its Chinese competitors, particularly Huawei with its Mate 60 series, which is seeing the most vigorous surge. While the latest monthly sales data is yet to be published, this trend is increasingly evident in the Chinese market.

November data from market research firm BCI shows that in the smartphone segment priced above CNY 4,000, Apple held the number one spot with over half of the market share, followed by Huawei with 22.3%, and Xiaomi at 14.4%. This price range is typically considered the stronghold of high-end smartphone consumers.

However, the growth rates of these three tell a different story. Apple saw a year-over-year decline of 21.2%, while the two domestic brands saw increases of 8.8% and 11.8% respectively. This indicates that domestic high-end smartphones are steadily reclaiming the Chinese user base from Apple.

Huawei’s counterattack is particularly fierce, as it accelerates its return to the high-end smartphone market in China. The Huawei Mate 60 series was launched at the end of August last year, ahead of the iPhone 15 series, and was seen as a direct challenge to Apple. Both series open at the same price point of CNY 5,999, and there was a time when the market demand for the Mate 60 outstripped supply.

According to figures disclosed by Jefferies, Huawei’s smartphone shipments in 2023 are estimated to be around 35 million units. The firm believes that due to production capacity limitations, it would be difficult for Huawei to further increase this number, suggesting that Huawei might focus on enhancing its manufacturing capabilities in the future. Should a growing number of consumers switch to Huawei phones, it wouldn’t be difficult for sales channels to handle the additional volume.

Like Apple, Huawei is eager to attract more developers to create native applications for its self-developed operating system, HarmonyOS. Large enterprises like Alipay and Meituan have already joined the ranks of HarmonyOS native app developers, with more than 700 million devices now integrated with HarmonyOS—directly competing with Apple’s iOS ecosystem.

Huawei Terminal BG CEO and Smart Car Solutions BU Director, Yu Chengdong, declared in an all-staff letter that this year is pivotal for HarmonyOS. Huawei aims to accelerate the development of a variety of native applications for its operating system.

Xiaomi, also vying for a slice of the high-end smartphone market alongside Apple, strengthened its presence last year. The company launched the Xiaomi 14 series in October and performed well during the Double 11 shopping festival, securing a significant stake in the over CNY 4,000 smartphone market segment.

Based on this backdrop, analysts are not optimistic about Apple’s performance in the Chinese market for the upcoming year. Even though the average selling price of iPhones has been reduced through various online promotions, this has not led to a significant bounce-back in sales volume.

This sentiment is reflected in the capital markets. In mid-December of last year, Apple’s total market value surpassed $3.1 trillion, setting a historical record. However, since January, its market value has dropped from the peak of $3 trillion, closing at $2.82 trillion on January 8th, a decrease of 9%.

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