Apple fell out of the top five smartphone sellers in China for the first time in four years in the second quarter, losing ground to domestic manufacturers’ models like Huawei.
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"While smartphone shipments in China rose by 8.9 percent year-over-year to 71.6 million units—the third consecutive quarter of growth after a slump—Apple recorded a decline of 3.1 percent, according to preliminary data from the International Data Corporation (IDC).
However, Apple still has a larger market share in China than in 2020, currently at 13.6 percent compared to 8.3 percent in the third quarter of that year, as noted by IDC.
Data from the rival research group Canalys also showed that local companies now make up the top five sellers in China. Xiaomi made it into the top five, while Apple's market share fell by 2 percentage points in the quarter despite the discounts on iPhone models. Canalys reported that Xiaomi's smartphone sales benefited from the marketing attention surrounding the launch of its first electric car, the SU7. Vivo, Oppo, and Honor are the other Chinese brands in the top five.
Concerns about increasing competition and government action against iPhones in China have been a persistent issue for Apple in recent months, balancing out positive indicators such as the ongoing double-digit growth of its services business, which includes the App Store, Apple Pay, and Apple TV+.
Huawei launched its flagship smartphone series Mate 60 in September last year.
The decline of Apple in the first half of 2024 goes beyond seasonal fluctuations and is directly attributable to increased competition from Huawei, the only other major player in the premium segment besides Apple," said IDC Research Director Nabila Popal to the Financial Times.
The decline of Apple year-over-year in China has "slightly improved" compared to the first quarter, according to research. "The threat from Huawei may lose momentum if they don't introduce AI features soon - as these are expected to become fundamental elements of premium devices," added Popal.
Apple will announce its quarterly results up to the end of June next Thursday, with investors looking for signs of an increase in global iPhone sales. CEO Tim Cook has increasingly expressed optimism in public about the potential of artificial intelligence to boost sales by 2025.
The analysts at Bank of America reaffirmed their "buy" rating for Apple this month, stating that they expect a strong multi-year renewal cycle for the iPhone, driven by a large base of users with older models who would be attracted by new AI features.
Apple introduced "Apple Intelligence" at its annual developer conference in June. The suite of AI features will include a smarter Siri assistant and new tools such as photo editing functions, custom emoji generation, and writing aids.
A partnership with OpenAI will also grant Apple users free access to ChatGPT, allowing them to benefit from the larger AI models. The new iPhone 16 is expected to be announced in September.
After a rocky start, Apple shares have risen by 17 percent since the beginning of 2024, and the company has regained its position as the most valuable publicly traded company in the U.S. from Microsoft and Nvidia.
