A new report from market research firm Counterpoint Research has disclosed that the sales of Apple iPhone in China declined significantly, as it faces stiff competition from local brand Huawei which recorded high demand.
Data showed that sales of iPhone in China fell by 19.1% in the first three months of the year, as Huawei saw a resurgence in its smartphone business. The Chinese multinational digital technology company recorded a whopping 69.7% of sales in the first quarter (Q1) of 2024.
Speaking on the report, senior research analyst for Counterpoint Research, Ivan Lam said,
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“Apple’s sales were subdued during the quarter as Huawei’s comeback has directly impacted Apple in the premium segment. Besides, the replacement demand for Apple has been slightly subdued compared to previous years.”
Lam further hinted that Apple could still see a recovery in China with the possibility of new color options for its flagship devices, aggressive discounts, and new Al features expected to be unveiled at its upcoming Worldwide Developers Conference (WWDC) in June.
Huawei’s surge in demand of its latest flagship phone in China, is coming several years after the U.S. restricted the sale of the phone, maintaining that it presents a national security risk due to alleged links to the Chinese Communist Party and the country’s military.
Huawei saw its market share shrink due to this ban that severely affected its business. The company’s smartphones lost relevance, and the brand had to reinvent itself in the market.
Due to this ban, the Wall Street Journal reported that Chinese central government staffers were banned from using iPhones and other foreign-branded phones for work and even prohibited from being brought into the office. Some analysts suggested Beijing’s bans on Apple were part of tit-for-tat measures, after Huawei bans by the US and others.
As geopolitical tensions between the U.S. and China continued to bubble under the surface, it posed a potential for Huawei’s resurgence, posing a big threat to Apple.
A senior research manager at IDC, Will Wong told CNBC,
“It’s expected that Huawei will pose a bigger challenge to Apple in China than the geopolitical issue. This is because Huawei not only has the same premium brand image as Apple but also is a national pride in China.”
Apple is seen as a high-end smartphone maker and Huawei has directly competed with the U.S. firm in China for years. But Huawei’s sales fell off a cliff when it couldn’t equip its smartphones with 5G technology and the latest chips.
After some troublesome years, the company managed to overcome these challenges. Last year August, Huawei staged a surprise comeback with the Mate 60 Pro smartphone, powered by a home-grown advanced processor.
The Mate 60 Pro is equipped with a stunning 6.82-inch OLED display, featuring the newly released HarmonyOS 4, highly acclaimed smart features such as artificial intelligence (AI) remote control, intelligent touch payment, and always-on display.
Notably, the Mate 60 Pro is the world’s first mass-market smartphone to support satellite calls, allowing users to make and receive satellite calls with ease even in areas without ground network signals. Within months of the release, the device achieved 30 million in sales.
This was Huawei’s first 5G smartphone since tightened US trade sanctions in 2020, and its release fuelled a wave of patriotic fervor among Chinese consumers that boosted domestic sales.
A Tekedia article last year predicted that Huawei on the power of Mate 60 Pro will capture a lot of market share from Apple iPhone in China, over the next few years, if Apple does not respond fast enough.
Also, several analysts predicted that the Huawei smartphone could threaten Apple’s dominance in China. The Mate 60 Pro which has a semiconductor chip that’s 5G capable represented a breakthrough achievement.
However, Huawei is not backing away from further advances in the smartphone industry. The company has disclosed that it will resume its pace of launching flagship smartphones, which include the Mate series and P series.
The biggest threat Apple will continuously see from Huawei, is its continuous development in technology, not only in chips but also in new form factors like foldables. With the undeniable success of the Huawei Mate 60 series, Huawei is now confident about its next flagship series.