Apple CEO Tim Cook made a significant return to China, visiting Shanghai on March 20 after a 5-month hiatus.
He engaged with major suppliers and addressed generative AI for the first time in China during an interview with Chinese media. Reports from National Business Daily, China Business Network, and Jiemian News revealed that three Apple suppliers – BYD Electronics, Lens Technology, and Everwin Precision Technology – showcased their smart manufacturing technologies, components, and products at Apple's China headquarters in Shanghai with their respective chairmen present at the event.
Cook also shared a video on his Weibo account, showing his inspection of the production of Vision Pro components by Chinese suppliers at the China headquarters. Among the showcased components were Everwin Precision's metal frames and Lens Technology's protective panels for the Vision Pro.
Tim Cook's latest trip to China underscores Apple's commitment to the market and highlights the importance of its Chinese supply chain. However, Apple faces an uphill battle to regain its past dominance in the Chinese market amid a shifting market landscape.
Counterpoint Research analysts noted that while the Chinese market is recovering, Apple faces mounting competition, particularly from Huawei in the high-end market and various Chinese OEMs in the iPhone 13 and iPhone 14 segments. Data from Counterpoint Research indicated a decline in Apple's iPhone sales by 24% year-on-year in the first six weeks of 2024, with its Chinese market share dropping to 15.7% from 19% in 2023, ranking fourth.
Vivo rising as top vendor in China market
In contrast, Huawei's sales surged 64% year-on-year, and its market share in China advanced from 9.4% in 2023 to 16.5%, surpassing Apple's. In addition, Vivo emerged as the top vendor in the Chinese market in the period thanks to a wider range of models and broader market coverage, posing further challenges to Apple's position.
Since terminating its car project, Apple has shifted its focus to AI, particularly large language models (LLMs). However, several Chinese competitors have made significant strides in the field. Huawei's HarmonyOS 4 integrates seamlessly with the Pangu LLM, while Xiaomi's Surge OS leverages the capabilities of its MiLM-6B AI large model.
Research estimates indicate that shipments of AI-enabled smartphones will reach around 60 million units in 2024. AI smartphones will dominate core differentiation competition in the next replacement cycle, and Chinese manufacturers are aggressively integrating AI features, making it crucial for Apple to deliver exceptional generative AI services this year if it wants to stay ahead in smartphone innovations and sales.
Cook's recent statements at Apple's shareholders meeting and in interviews with Chinese media indicate the company's commitment to AI development. Apple is reportedly considering integrating Google Gemini into iPhones, signaling its proactive approach to AI innovation.
During his interview with Chinese media on March 20, Cook emphasized Apple's existing use of AI across its product ecosystem, citing features like fall detection on the Apple Watch and predictive text input on the iPhone as examples of AI integration.
