Apple's iPhone Sales Plummet in China Amid AI Challenges and Local Competition

Apple smartphone sales in China drop By Investing.com

Investing.com -- Apple's iPhone sales in China plunged 18.2% during the December quarter, marking a significant setback in one of its most crucial markets, according to a report by Counterpoint Research cited by Bloomberg. The decline saw Apple (NASDAQ:AAPL) lose its top spot to Huawei Technologies Co. in the world's largest smartphone market, slipping to third place with roughly a sixth of the market share. The dip in China contributed to a 5% global decrease in iPhone sales during the critical holiday shopping period. The performance is said to highlight a mixed reception for Apple's latest iPhone lineup, which initially enjoyed a strong launch but later lost momentum. A key issue for Apple has reportedly been the limited availability of its new artificial intelligence features in China, as the company has yet to finalize partnerships with local tech firms like Baidu Inc (NASDAQ:BIDU). and Tencent Holdings Ltd (HK:0700) (F:NNND). to support on-device and cloud AI infrastructure. Meanwhile, Huawei capitalized on the opportunity with the launch of its Mate 70 handsets, which offer a US technology-free experience through the HarmonyOS Next (LON:NXT) operating system. The move, supported by domestically produced chips, is said to have helped Huawei regain its position in the premium segment of the Chinese market. The broader Chinese smartphone market experienced a decline in the final quarter of 2024 after enjoying growth for most of the year. "This is the first time since the US ban that Huawei regained the leading position," said Counterpoint analyst Mengmeng Zhang, noting a 15.5% year-over-year increase in Huawei's sales driven by the mid-end Nova 13 and high-end Mate 70 series.

Apple's China Troubles Continue With 18% iPhone Sales Drop | PYMNTS.com

Apple reportedly closed out 2024 suffering a double-digit drop in iPhone sales in China. Sales of the company's flagship product were down 18.2% in China during the last quarter of the year, Bloomberg News reported late Monday (Jan. 20), citing Counterpoint Research data. It was the latest example of Apple's struggle in China, its biggest market outside the U.S. According to the report, iPhones - which had been the number one phone in China this time last year - fell to third place, with China's Huawei taking the number one spot. "This is the first time since the U.S. ban that Huawei regained the leading position," Counterpoint analyst Mengmeng Zhang said. "Huawei's sales increased 15.5% YoY driven by the launch of the mid-end Nova 13 series and high-end Mate 70 series." This follows similar Counterpoint research from last week showing that iPhone sales had fallen 5% last year amid stronger competition, and a lack of Apple's artificial intelligence (AI) features on phones sold in China. Apple has been slower to roll out its AI offerings compared to its competitors, introducing its Apple Intelligence suite following the debut of the iPhone 16 in September. The company has not been able to add AI features to iPhone 16s sold in China due to local restrictions. China's government requires generative AI operators to secure permission before they can roll out a product. That's left Apple trying to land partnerships with Chinese companies to introduce its AI feature. Apple is also facing pressure in another major smartphone market, with Indonesia banning the iPhone due to that country's content restrictions. The company had proposed making a $1 billion investment in local manufacturing, but Indonesia's government said that wasn't enough to meet a regulation that requires 40% of all content in devices to be sourced in-country. As noted here last year, experts argue the company's embrace of AI technology could transform how people shop, while also pushing back against the idea that Apple is lagging in Big Tech's AI race. "Apple may be late to the AI surge compared to Google and Amazon, which have been adding AI to products for years," The Big Phone Store CEO Steven Athwal said in an interview with PYMNTS. "But Apple has always been about timing and refinement. While others rushed to put out the latest in AI tech, Apple focused on privacy, security and user experience."

Second report corroborates iPhone's fall from 1st to 3rd place in China - 9to5Mac

Two of the world's leading market intelligence firms report that the iPhone has lost its place as the best-selling phone in China, dropping from 1st to 3rd place in the final quarter of last year. Increased competition from local brands is cited as one factor, the second being Apple's inability to offer AI features in the country ... Canalys was first to report on Apple's changing fortunes in China. Canalys reports that iPhone shipments in China fell by 25% year-on-year in the final quarter of the year. That means Apple's market share fell from a chart-topping 19% in 2023 to joint-third with Oppo and Honor in 2024, each with a 15% share. While the exact estimates differ, Counterpoint Research now reaches the same conclusion. Huawei took the top spot, followed by Xiaomi and Apple [...] In Q4 2024, Huawei climbed to the top spot with an 18.1% share. This is the first time since the US ban that Huawei regained the leading position [...] Xiaomi secured the second spot in Q4 2024 with a 17.2% market share, driven by strong growth from Q3 into Q4. This growth was fueled by the popularity of its flagship Mi 15 series, launched in October. Xiaomi has made significant progress in premiumization this year [...] Amid intensifying market competition from Huawei and other Chinese OEMs expanding into the premium market, Apple ranked third during the quarter, capturing a 17.1% market share. While smartphones from Chinese brands now have AI features, Apple Intelligence is not yet available in the country. Apple wanted to be able to use its own generative AI model there, but the Chinese government essentially said that wouldn't be permitted. The government last month said that launching Apple Intelligence in China would be a "difficult and long process" unless the iPhone maker partners with a local AI company. Working with a Chinese company would instead be "simple and straightforward." Apple is believed to be negotiating with Tencent and ByteDance, but with nothing to show for it as yet.