Apple iPhone sales in China fall 19% as demand for Huawei smartphones rises, research says

Topshot – The Apple iPhone 15 series is displayed for sale at The Grove Apple Store on launch day on September 22, 2023 in Los Angeles, California. (Photo by Patrick T. Fallon/AFP) (Photo by Patrick T. Fallon/AFP via Getty Images)

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apple The latest report from market research firm Counterpoint Research shows that iPhone sales in China fell sharply in the first quarter of this year due to fierce competition from domestic brand Huawei.

Counterpoint data showed Apple’s iPhone sales fell 19.1% in the first three months of this year as Chinese telecom and consumer electronics giant Huawei’s smartphone business recovered.

Counterpoint said the Shenzhen, China-based company’s smartphone sales rose 69.7% in the first quarter.

This is largely thanks to the launch of the Huawei Mate 60 smartphone, which comes with a high-end chip that supports next-generation 5G mobile connectivity.

Since 2019, the United States has imposed sanctions on Huawei trying to prevent it from acquiring such technology, almost eliminating Huawei’s smartphone business.

Now Huawei is making a comeback. The company is China’s fourth-largest smartphone maker, putting pressure on third-ranked Apple, according to a Tuesday research note from Counterpoint.

Apple shares fell in US premarket trading on Tuesday.

“Apple’s sales were subdued this quarter as Huawei’s resurgence directly impacted Apple’s performance in the high-end market,” Ivan Lam, senior research analyst at Counterpoint Research, said in a statement.

“Also, Apple’s demand for replacements is down slightly from the previous year.”

Lam hinted that the iPhone maker could still see a recovery in China, with its flagship device coming with new color options, deep discounts and the expected unveiling of new artificial intelligence at the upcoming Worldwide Developers Conference (WWDC) in June.

“This has the potential to significantly boost development in the long run,” he said.

Overall, smartphone sales in China rose 1.5% year-on-year in the first three months of this year, marking a positive second quarter for the industry.

Counterpoint said it expects the annual growth rate of China’s smartphone market to be only single digits in 2024.

The company said it expects Chinese smartphone makers to embed artificial intelligence features into their phones to fuel new demand for new phones.

Chinese equipment maker Millet and Oppo have integrated Qualcomm Snapdragon 8 Gen 3 processors designed for artificial intelligence applications in their latest flagship phones.

Meanwhile, Huawei subsidiary Honor showcased AI-powered eye tracking on its latest flagship smartphone Magic 6 Pro, which allows users to control their car with their eyes.

Chinese smartphone companies may start incorporating new artificial intelligence technologies into their budget phones in the future, Counterpoint reported.