Apple Inc. has lost its foothold among the top five smartphone vendors in China for the first time in four years, according to recent data from market trackers IDC and Canalys. The drop comes as domestic companies like Huawei Technologies Co. and others have surged ahead, marking a significant shift in the competitive landscape of the world's largest smartphone market.
During the June quarter, iPhone shipments in China fell by 3.1%, contrasting sharply with an 11% year-on-year increase for Android-powered competitors. This shift pushed Apple out of the top five, with market research firm Canalys reporting a 3.9% decline in iPhone shipments, while Counterpoint Research noted a 5.7% drop.
Apple, which has relied heavily on the Chinese market for a substantial portion of its revenue, has struggled to maintain its usual popularity. This decline comes despite efforts by retailers and Apple itself to offer deep discounts. The downturn in China's economy has further exacerbated the slowdown in iPhone sales. In contrast, Huawei's resurgence and the strong performance of other local brands like Vivo and Xiaomi have intensified the competition.
"We did see a year-over-year growth in the April-to-May shipments, particularly April, to prepare for the 618 shopping festival," said IDC analyst Will Wong. "Nevertheless, the offline channel partners, who were more reluctant to burn marketing money, slowed down the pace in the last month of 2Q24 to ensure profitability."
The discrepancy between government data and research firm reports adds to the complexity of assessing iPhone shipments in China. Government statistics track smartphones registered before being shipped to retail stores, while firms like IDC focus on actual deliveries to retail partners, offering a closer correlation with sales.
Despite these challenges, Apple CEO Tim Cook reported a surprising growth in iPhone revenue in China during the March quarter, defying widespread estimates of declining shipments. However, the latest quarter saw Huawei's shipments improve by 50%, driven by strong offline and online sales during major e-commerce events.
Apple's current position in the Chinese market reflects a significant change from just a few months ago. Beijing government data showed a surge of more than 40% in April and May, but a drop in shipments last month due to profitability concerns among local partners has affected the overall performance.
Looking ahead, Apple plans to ship at least 90 million iPhone 16 devices globally in the latter half of this year, banking on AI services to drive demand. The company is targeting about 10% growth in shipments of new iPhones compared to their predecessors.
"The company is in a much better position today in China than it was back in 2020, with a significantly higher share - 13.6% now versus 8.3% in 2020 Q3 - and almost 40% higher shipment volume," said IDC analyst Nabila Popal.
In the broader Chinese market, Vivo reclaimed the top spot with a 19% market share, shipping 13.1 million units, buoyed by strong sales during the "618" e-commerce festival. Oppo maintained second place with 11.3 million units, driven by the launch of its new Reno 12 series. Honor, a Huawei spinoff, came in third with 10.7 million units shipped, marking a 4% year-on-year increase. Huawei itself came fourth with a 15% market share and 10.6 million shipment units, reflecting a significant resurgence after launching its Mate 60 smartphone. Xiaomi took the fifth spot, with the buzz from its first electric car, the SU7, contributing to solid sales of its K70 and flagship 14 series.
Overall, the Chinese smartphone market grew 10% year-on-year in the second quarter, with shipments exceeding 70 million units, according to Canalys.
