Apple Inc. has encountered a significant downturn in iPhone sales during the initial weeks of 2024. A report by Counterpoint Research highlighted a 24% decrease in sales, marking a challenging period for the tech giant as it contends with the revitalized presence of Huawei and other local manufacturers like Oppo, Vivo, and Xiaomi.

This downturn has impacted Apple's stock, which experienced a decline of more than 2% in early U.S. trading sessions. The resurgence of Huawei, particularly after the launch of its Mate 60 smartphone, has been pinpointed as a key factor in Apple's current predicament. Huawei's ability to introduce a 5G-capable device, despite facing significant sanctions from the U.S. government, has positioned it as a formidable contender in the high-end segment of the market, directly rivalling Apple's offerings.

Counterpoint Research's findings also reveal broader trends within the Chinese smartphone sector, with Huawei and its spinoff brand Honor emerging as the only companies to report growth during this period. Huawei's smartphone shipments surged by 64%, while Honor saw a modest 2% increase. In contrast, other Chinese brands like Oppo, Vivo, and Xiaomi witnessed declines in their shipment volumes, though not as pronounced as Apple's.

The resurgence of Huawei marks a critical turning point, considering its previous dominance in the global smartphone market and its direct competition with Apple in the premium segment. The Mate 60's unexpected launch has rekindled Huawei's competitive edge, attracting customers who had shifted to iPhone in the absence of a strong Huawei alternative.

Apple's supply chain issues, exacerbated by Covid-19 lockdowns in China towards the end of 2022, have also played a role in the company's recent struggles. These disruptions have led to an abnormal sales pattern, with a higher 'sell-through' in January 2023 compared to 2024, as noted by Neil Shah, an analyst at Counterpoint Research.

In response to the mounting competition and declining market share, Apple has initiated price subsidies on certain iPhone models through Tmall, Alibaba's leading marketplace, with discounts reaching up to 1,300 yuan ($180.68). This move follows earlier price reductions on Apple's official sites, signaling a strategic shift to bolster sales amid an increasingly competitive market landscape.

Huawei's revival in the premium smartphone segment with the Mate 60 series has indeed posed a significant challenge for Apple, altering the dynamics of China's smartphone market. With Huawei's market share rising to 16.5% from 9.4% a year earlier, and Apple's share dropping to 15.7%, the competitive pressures are evident. The overall smartphone market in China has contracted by 7%, adding another layer of complexity to Apple's operational environment.

As Apple navigates this tumultuous market, the strategic moves it makes in response to Huawei's resurgence and the broader shifts within the Chinese smartphone industry will be closely watched. The evolving competitive landscape underscores the need for continuous innovation and adaptation, particularly in a market as pivotal and dynamic as China's.