Apple iPhone sales drop 19% in China as demand for Huawei smartphones soars, research says

According to a new report from market research firm Counterpoint Research, iPhone sales in China fell dramatically in the first quarter of this year as the company faced strong competition from homegrown brand Huawei.

Apple’s iPhone sales fell 19.1% in the first three months of the year, according to Counterpoint data, while Chinese telecommunications and consumer electronics giant Huawei enjoyed a revival in its smartphone sector.

Counterpoint reported that the Shenzhen, China-based company’s smartphone sales increased by 69.7% in the first quarter.

This was due in large part to the release of Huawei’s Mate 60 smartphone, which includes a high-end chip that supports next-generation 5G mobile communication.

Beginning in 2019, the United States imposed penalties on Huawei in an effort to prevent it from acquiring such technologies, nearly destroying Huawei’s smartphone industry.

Now Huawei is making a comeback. According to Counterpoint’s Tuesday research note, the company is the fourth-largest smartphone manufacturer in China, putting additional pressure on Apple, which is ranked third largest.

Apple shares fell marginally in premarket trade in the United States on Tuesday.

“Apple’s sales were subdued during the quarter as Huawei’s comeback has directly impacted Apple in the premium segment,” Ivan Lam, senior research analyst at Counterpoint Research, said in a statement.

“Besides, the replacement demand for Apple has been slightly subdued compared to previous years.”

Lam hinted that the iPhone maker may still see a comeback in China, citing the likelihood of new color options for its flagship products, aggressive discounts, and new AI technologies to be unveiled at its upcoming Worldwide Developers Conference (WWDC) this June.

“That has the potential to move the needle significantly longer term,” he went on to say.

China’s Smartphone Industry Outlook
Overall, smartphone sales in China increased 1.5% year on year in the first three months of the year, marking the industry’s second consecutive quarter of positive growth.

Counterpoint forecasts low single-digit year-on-year growth in China’s smartphone market in 2024.

The company stated that it expected AI technologies included in Chinese smartphone producers’ handsets to stimulate increased demand for new mobile phones.

Xiaomi and Oppo, both Chinese handset makers, have put Qualcomm’s Snapdragon 8 Gen 3 engine, which is optimized for AI applications, into their latest flagship phones.

Huawei offshoot Honor, meanwhile, demonstrated an AI-powered eye-tracking function in its latest flagship smartphone, the Magic 6 Pro, which allows users to operate a car with their eyes.

According to Counterpoint, Chinese smartphone manufacturers will most certainly begin to incorporate new AI developments into their mid-range phones in the future.