Apple's Smartphone Shipments in China Decline by 19% in Q1

Apple faced a significant setback in China as its smartphone shipments plummeted by 19% in the first quarter of this year, marking its worst performance since 2020. 

Market data revealed that the tech giant struggled against fierce competition from Huawei's new product launches in the premium segment. 

According to research firm Counterpoint, Apple's share in China's smartphone market dropped to 15.7% in Q1 from 19.7% the previous year, nearly matching Huawei's share. 

Huawei experienced a remarkable 70% surge in sales during the same period, placing it almost neck and neck with Apple. 

The Cupertino-based company, which traditionally held the top spot in China's smartphone market, slipped to third place in the quarter, trailing behind Vivo and Huawei. Honour, a sub-brand of Huawei, secured the second position. 

Counterpoint analyst Ivan Lam attributed Huawei's resurgence and Apple's decline to the impact of Huawei's comeback in the premium segment and subdued replacement demand for iPhones. 

Lam expressed optimism for Apple's prospects in the second quarter, anticipating that new colour options and aggressive sales initiatives could help regain lost ground. 

China constitutes Apple's third-largest market, accounting for approximately 17% of its total revenue in the last quarter of 2023. 

However, the company's market share loss in China coincides with a broader decline in global smartphone shipments, with Apple experiencing a nearly 10% drop in the first quarter of 2024 due to heightened competition from Android manufacturers, particularly Samsung Electronics. 

Shares of Apple dipped by 0.4% in premarket trade following the news. The stock has seen a 14% decline since the beginning of the year and recorded its poorest weekly performance in over eight months. 

To counter its dwindling sales in China, Apple launched promotional campaigns offering discounts on certain iPhone models, including subsidies of up to 1,300 yuan ($180). 

Meanwhile, Huawei released its Pura 70 series of high-end phones, following the Mate 60 series launch last August, signalling a successful return to the premium market. 

Despite Huawei's resurgence, U.S. Commerce Secretary Gina Raimondo asserted that Huawei's flagship phone's chip, though advanced, is not on par with American chips, suggesting that U.S. restrictions on chip shipments to the company are effective. 

Looking ahead, Canadian research firm TechInsights projects China's smartphone shipments to exceed 50 million units this year, with Huawei expected to capture a 19% market share, up from 12% in 2023.

Despite challenges, China's smartphone market experienced 1.5% growth in the first quarter, marking the second consecutive quarter of positive growth, according to Counterpoint.