On January 16, 2025, Canalys reported that iPhone shipments in China fell by 25% in the fourth quarter of 2024, while Huawei's shipments rose by 24% during the same period. This significant shift highlights Apple's growing challenges in China, including strong competition from government-supported Huawei, the country's weakening economy, and reduced consumer spending.
Huawei narrows market gap
According to Reuters, citing Canalys data, Apple shipped 13.1 million iPhones in China during the fourth quarter of 2024, maintaining its market leadership with a 17% share.
Note: OPPO includes OnePlus
Credit: Canalys, compiled by DIGITIMES, January 2025
Note: OPPO includes OnePlus
Credit: Canalys, compiled by DIGITIMES, January 2025
Total smartphone shipments in China grew 5% year over year in the fourth quarter of 2024, reaching 77.4 million units. Huawei ranked second in shipments, increasing from 10.4 million units in the fourth quarter of 2023 to 12.9 million units in 2024, achieving a 17% market share and nearly matching Apple's leading position.
China's smartphone market saw a recovery in 2024 after two years of decline, with annual shipments rising 4% to 285 million units. Vivo led the market with a 17% share and 49.3 million units shipped, followed by Huawei with 46 million units and an impressive 37% growth. Apple, OPPO, and Honor each held a 15% share, underscoring the intense competition in the sector.
Sales pressure mounts amid price cuts
Canalys Senior Analyst Toby Zhu told Yicai Global that while the fourth quarter is typically a peak sales season for Apple's iPhones, the company is likely to face increasing sales pressure in the coming quarters.
In a challenging start to 2024, Apple encountered significant difficulties in China. During the first quarter, iPhone sales declined by 19%, marking the worst performance since 2020 and placing Apple fourth in market share. By the second quarter, its market position fell further, with iPhone shipments dropping out of the top five for the first time.
Facing mounting competition, Apple launched a rare four-day promotion in China from January 4 to 7, 2025, offering discounts of up to CNY500 (US$68.20) on iPhone 16 models. Major e-commerce platforms, including Alibaba's Tmall, joined with their discounts of up to CNY1,000 on iPhone 15 devices.
Government subsidies reshape market dynamics
Yicai Global reported that Apple's price cuts may provide a modest boost to sales, but their impact is constrained by new government subsidies targeting devices priced under CNY6,000, a threshold that excludes Apple's premium products.
"The national subsidy policy primarily aims to stimulate the mid-tier smartphone segment," Zhu noted. While high-end domestic models are also excluded from subsidies, he emphasized that Huawei and flagship Android devices remain strong competitors in the market.
Amber Liu, Canalys research manager, noted that fierce rivalry is reshaping the market, with manufacturers ramping up investments in key areas. Despite the iPhone 16 series retaining the top spot in the fourth quarter, Apple faces rising pressure from domestic flagship brands. To bolster its position in the high-end market and drive customer loyalty, Apple is enhancing retail experiences, expanding trade-in programs, and increasing interest-free installment options.
Production outlook and AI challenges
TF International Securities analyst Ming-Chi Kuo projected that Apple's iPhone shipments in 2025 would total between 220 million and 225 million units, falling short of the market consensus of over 240 million units. He observed that Apple has adopted a cautious approach in its 2025 production discussions with suppliers.
The smartphone market may struggle to achieve significant growth in 2025, as 2024 gains were largely driven by inventory restocking and a partial recovery in macroeconomic conditions. Demand volatility and economic uncertainty remain key challenges, according to Yicai Global.
"Manufacturers will prioritize high-end products, leveraging AI features, innovative designs, and stronger marketing efforts to enhance their competitiveness," Zhu stated.
Apple is working with partners to integrate Apple Intelligence into iPhones for the Chinese market, pending regulatory approval. In October 2024, Tim Cook acknowledged that the impact of Apple Intelligence on driving iPhone upgrades remains uncertain.
Economic and competitive pressures intensify
Data from the China Academy of Information and Communications Technology (CAICT) revealed a 47.4% year-over-year drop in foreign smartphone sales, including iPhones, in China for November 2024. This marked the fourth consecutive monthly decline and underscored the intensifying pressure on Apple, the top foreign smartphone supplier in the country.
The data underscores Apple's mounting challenges in China, driven by a slowing economy and stiff competition from domestic brands such as Huawei, according to The Epoch Times.
Economic uncertainty and deflation concerns in China are weighing on household spending. Official data from December 9, 2024, showed a third consecutive monthly decline in the Consumer Price Index (CPI) for November, reaching a five-month low.
In recent years, the Chinese government has imposed stricter policies on Apple while backing Huawei, deepening Apple's struggles in the Chinese market. The company's ability to navigate political pressures and economic challenges will be crucial for maintaining its presence in this key market.