iPhone Q1 Sales Dip 19% in China: A Low Point?

According to data from the independent research company Counterpoint Research, Apple’s iPhone sales in China decreased by 19% in the first quarter. This marks the worst sales performance of the product in the Chinese market since the outbreak of the pandemic around 2020. The research estimates that Apple has slipped to third place in the fiercely competitive Chinese market, nearly level with Huawei. The overall market has grown by around 1.5%, with local brands like Honor and Xiaomi leading the growth.

With the release of the Huawei Pura70 series, the current market performance continues the previous popularity seen with the Huawei Mate 60 Pro series, making it still hard to find in stores. Huawei’s forefront plan has now become an important way for consumers to purchase Huawei phones. Huawei’s dual-flagship strategy is gradually showing its advantages. In the high-end market, Huawei Mate and Pura target different user groups and have been validated by the market. More and more users are switching to Huawei phones, mostly at the expense of Apple’s market share.

Huawei’s strong sales also confirm that when Huawei initially withdrew, most of its market share was taken by Apple. Now, it seems like it’s time for Apple to “pay back.” In the Chinese market, undoubtedly, the most popular phones are those belonging to the Huawei product line. Despite Apple continuously reducing prices, even with CEO Tim Cook visiting China frequently in hopes of sustaining the previous sales momentum, users are seemingly not convinced. Even with the price cuts, users desire more resolute technological breakthroughs rather than incremental changes in iPhones.

Even TSMC (Taiwan Semiconductor Manufacturing Company) remains pessimistic about the revival of the smartphone market this year. Demand for the company’s subcontracting business in the smartphone sector is shrinking. However, with the rise of Artificial Intelligence (AI), TSMC has managed to alleviate some of the pressure on capacity due to the high demand for AI chips, especially popular ones like NVIDIA’s. Previously, TSMC almost exclusively reserved this capacity for Apple.

As sales decline, the demand for capacity also decreases, which is why TSMC is skeptical about the recovery of the smartphone industry. The current slump in iPhone sales in the Chinese market further confirms this point. User preferences are no longer singular. Moreover, Apple’s performance in the next fiscal quarter may even be worse. TSMC’s pessimism about the market is actually a manifestation of Apple’s market performance. As the Chinese smartphone market increasingly emphasizes AI capabilities, Apple still struggles to unleash more technological prowess, leading TSMC to temper its future expectations.

Foreign media indicate that with the release of the Huawei Pura70 series and Apple’s next flagship product not expected until September this year, there is almost a six-month gap. This undoubtedly provides ample time for Chinese brands like Huawei to vie for market share. Moreover, Huawei’s production capacity growth and supply chain capabilities are steadily improving. This time, the Pura 70 series has significantly outpaced the supply speed of the Mate 60 Pro series. As long as production capacity meets demand, user enthusiasm for purchasing is expected to remain high.

The market perceives Huawei’s sales growth of nearly 70% as a clear indication of its rise in the high-end market that was once dominated by Apple. Currently, Huawei and Apple are increasingly competitive in the product range above $800. When Apple products lack allure, it is clear that the Huawei Mate 60 Pro and Huawei Pura 70 series have ignited user enthusiasm.

Previously, IDC’s analysis showed a nearly 10% decrease in global iPhone shipments in the first three months of 2024, sparking concerns about Apple’s growth prospects. Counterpoint’s data provides a comprehensive view of the first quarter. The research firm stated last month that it estimated a 24% decline in Apple’s iPhone sales in China in the first six weeks of the year. Furthermore, Counterpoint analysts believe that Huawei’s products have directly impacted Apple’s performance in the high-end market, thus restraining Apple’s quarterly sales. Additionally, there has been a slight decline in consumer demand for upgrading iPhones compared to previous years.

American media speculates that the Huawei Mate60 series released in August last year already significantly influenced iPhone sales in mainland China. Now, with the launch of the Huawei Pura70 series, offering users new choices, it is highly likely to exert more pressure on iPhone sales. Market institutions are optimistic about the shipment volume of the Huawei Pura70 series, expecting it to reach 13-15 million units, a staggering increase of 230%.

Of note, besides making breakthroughs in chip technology, Huawei’s operating system has also reached a crucial turning point. Internal sources from Huawei suggest that the Huawei Mate70 series is expected to feature the “pure HarmonyOS,” which will undoubtedly be a game-changer for Huawei phones. From self-developed chips and operating systems to the recent high-profile return, Huawei’s relentless pursuit of technological innovation has almost filled all gaps within a few years. Huawei is undoubtedly Apple’s biggest competitor, leading to foreign media exclaiming that Apple is “sweating profoundly.”

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