Apple faces decline in Chinese smartphone market amidst Huawei's resurgence

Apple experienced a major setback in the Chinese smartphone market during the first quarter of the year, with shipments falling by 19 per cent, marking its poorest performance since 2020.

This decline can be attributed to intensified competition from Huawei's latest product releases, particularly in the premium segment, according to market data cited by Reuters.

Apple's market share in China fell to 15.7 per cent in the first quarter, down from 19.7 per cent the last year, placing it nearly on par with Huawei, which saw a 70 per cent increase in sales, as reported by research firm Counterpoint.

Because of this decline, Apple lost its position as the leading smartphone vendor in China, pushed to third place behind Vivo, with Huawei closely behind.

Counterpoint analyst Ivan Lam noted that Huawei's resurgence directly impacted Apple's performance in the premium market segment, along with passive replacement demand for iPhones compared to previous years.

Lam remains optimistic about Apple's prospects for the second quarter, suggesting that new colour options and aggressive sales campaigns could possibly restore the brand's momentum.

Although there are challenges, there are indications of steady improvements in weekly iPhone sales.

China holds a major place for Apple, representing its third-largest market and contributing approximately 17 per cent of its total revenue in the October-December quarter.

However, the company's market share loss in China comes along with a fall in global smartphone shipments, with Apple experiencing a 10 per cent drop in the first quarter of 2024.

This decline wascaused due to increased competition from Android smartphone manufacturers, including Samsung Electronics, which reclaimed the top spot from Apple during this period.

Apple's stock performance reflects investor concerns, with shares declining by 0.4 per cent in premarket trade on Tuesday, marking a 14 per cent decrease since the beginning of the year.

Throughout the first quarter, Apple rolled out promotional campaigns in China to entice consumers with discounts, including subsidies of up to 1,300 yuan ($180) on certain iPhone models.

However, these initiatives were surpassed by Huawei's strategic moves, including the release of its Pura 70 series of high-end phones following the launch of the Mate 60 series.

The Mate 60 series was hailed as a triumph for Huawei in the high-end market.

(With inputs from Reuters)