Apple Faces Declining Smartphone Shipments in China

Apple smartphone shipments in China dropped by 6.7% in the second quarter of 2024, according to market research firm Canalys. This decline highlights the challenges the U.S. tech giant faces in its third-largest market amidst growing competition from domestic rivals like Huawei.

Decline in Apple’s Shipments and Market Share:

In the quarter ending June 2024, Apple’s shipments in China fell to 9.7 million units, down from 10.4 million units in the same quarter of the previous year.

As a result, Apple’s market share decreased from 16% to 14%, causing its ranking to slip from third to sixth place in the Chinese smartphone market. This setback for Apple comes as the overall smartphone market in China grew by 10% during the same period.

Huawei’s Resurgence and Market Leadership:

In contrast to Apple’s decline, Huawei’s smartphone shipments surged 41% year-on-year, reaching 10.6 million units in the second quarter. This growth was largely driven by the successful launch of Huawei’s new Pura 70 series in April. With this strong performance, Huawei secured a 15% market share, positioning itself among the top vendors alongside Vivo (19%), Oppo (16%), and Honor (15%).

Lucas Zhong, a research analyst at Canalys, noted, “Domestic manufacturers have demonstrated market leadership, occupying the top five positions in the mainland Chinese market for the first time in history.”

Huawei’s resurgence in the high-end segment, bolstered by the release of a device powered by a domestically made chip, has helped the company navigate U.S. sanctions that restricted its access to global chip supplies.

Apple’s Response and Challenges:

In response to the competitive pressures, Apple has ramped up its discounting efforts in China to boost sales.

The company launched an aggressive promotional campaign in May, doubling the scale of an earlier effort in February and offering price cuts of up to 2,300 yuan ($318.84) on select iPhone models.

Despite these measures, Apple continues to face growth challenges in the Chinese market, prompting the company to focus on optimizing its channel management.

Outlook for Huawei and Market Dynamics:

Analysts predict that Huawei’s strong performance will continue throughout the year. Canadian research firm TechInsights has projected that Huawei’s overall smartphone shipments in China will exceed 50 million units in 2024, with the Pura 70 series accounting for 10 million shipments. This would position Huawei as the No. 1 seller in the Chinese market with a 19% market share, up from 12% in 2023.