Apple Faces Worst Performance in China Since 2020 Amid Huawei's Resurgence

Apple experienced its worst performance in China since 2020 in the first quarter of 2024, according to a report from a Middle East newspaper. The tech giant's smartphone shipments in China tumbled 19% year-on-year, putting the company in third place in the Chinese smartphone market behind local brands Vivo and HONOR.

The decline in Apple's sales is attributed to fierce competition from Chinese smartphone makers, particularly Huawei's comeback. Huawei's sales in China jumped by almost 70% in the first quarter, giving the company a 15.5% market share, just behind Apple. The launch of Huawei's Mate 60 Pro 5G smartphone, which features a domestically produced advanced chip, has been a source of national pride for Chinese consumers and has contributed to Huawei's growth.

Why this matters: Apple's struggles in China highlight the increasing challenges faced by foreign tech companies in the world's largest smartphone market. The rise of domestic competitors and the Chinese government's push for technological self-reliance are reshaping the competitive landscape, with potential implications for Apple's global strategy and supply chain.

Preliminary data from research firm IDC showed that Apple lost its crown as China's biggest smartphone seller, with its market share falling to 15.6% as its smartphone shipments declined 6.6% from a year ago. Meanwhile, Honor and Huawei were tied for the top spot, with their market shares rising to 17.1% and 17%, respectively. The intense competition from Android players in China was cited as the main reason for Apple's decline, with the company's price promotions unable to mitigate the impact.

Apple is also facing other challenges in China, including greater regulatory scrutiny and efforts to diversify its supply chain away from Chinese suppliers. The company's reliance on the Chinese market, with more than 30% of its sales generated in the country, comes at a time when China is experiencing economic instability and pushing for greater domestic consumption over foreign products.

Despite the setbacks, there are indications of potential improvement for Apple in the second quarter. The introduction of new iPhone color options and aggressive sales initiatives are seen as factors that could help the company regain some of its lost market share. Industry analysts and consumers eagerly await Apple's upcoming earnings report on May 2, which is expected to provide insights into the company's strategies to address the challenges in China and its resilience in the face of increasing competition.

Key Takeaways

• Apple's smartphone shipments in China fell 19% YoY in Q1 2024.
• Huawei's sales in China jumped 70%, overtaking Apple as the 2nd largest player.
• Domestic competition and China's push for tech self-reliance challenge Apple in China.
• Apple lost its crown as China's biggest smartphone seller, with market share falling to 15.6%.
• Apple faces regulatory scrutiny and supply chain diversification in China amid economic instability.