Apple faces sharp drop in iPhone sales in China

Apple is facing a major challenge in the Chinese market, where revenue from iPhone sales fell 18.2% in the December quarter. This decline represents a significant setback in its second largest market after the US. Meanwhile, Huawei Technologies, a key competitor, has managed to regain the lead in smartphone sales, underscoring the changing dynamics in the global technology arena.

The decline in iPhone sales and the causes

According to a report by Counterpoint Research, Apple's $AAPLfell to third place among smartphone makers in China during the last quarter, where it now controls about a sixth of the market. The slump in iPhone sales in China has also had a major impact on the company's global results, which saw a 5% drop in sales during the key Christmas period.

One of the reasons for this decline is the uneven debut of the latest generation of iPhones. Although the new models started sales in China promisingly, they have gradually lost momentum. While Apple has added AI innovations to its devices, these features are not available in China due to the lack of a local cloud and AI infrastructure partner. Thus, Apple is in talks with Chinese tech giants such as Baidu and Tencent, as well as smaller startups, but so far to no avail.

Huawei's return to the top

On the other hand, Huawei has seen a 15.5% year-on-year increase in sales thanks to the success of its mid-range and higher-end models such as the Nova 13 and Mate 70. The Mate 70 phones, launched in late 2024, represent the first devices that are completely independent of US technology. Thanks to the HarmonyOS Next operating system and chips made in China, Huawei is succeeding in reestablishing its position in the premium segment.

"This is the first time since the US ban that Huawei has regained its leadership position," said Counterpoint Research analyst Mengmeng Zhang. This success demonstrates how quickly Huawei has been able to adapt and strengthen its competitiveness in its home market.

Impacts on the technology market

Apple's sales decline in China and Huawei's return to the forefront illustrate the rapidly changing dynamics in the smartphone industry. As the world's largest smartphone market, China represents a key arena where US and Chinese technology interests collide. While Apple faces difficult conditions and constraints, Huawei benefits from domestic market support and the ability to develop alternatives to foreign technologies.

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Source: Bloomberg