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Apple's China Challenge: iPhone Sales Dip as Huawei Surges
Ticker Tea
March 06, 2024
📝 SUMMARY: In a significant market shift, Apple's ($AAPL) iPhone sales in China faced a sharp decline of 24% during the first six weeks of 2024, as reported by Counterpoint Research. This downturn reflects intense competition from local smartphone manufacturers, with Huawei leading the charge. The Chinese tech giant's consumer business is rebounding, notably with the release of its Mate 60 smartphone, which directly challenges Apple's market share. Despite sanctions that had previously hampered its 5G capabilities, Huawei's resurgence marks a significant comeback, posing a considerable threat to Apple's dominance in the high-end segment.
Other Chinese smartphone makers, such as Oppo, Vivo, and Xiaomi ($1810), also experienced sales declines within the same period, though not as severe as Apple's. Oppo's shipments fell by 29%, Vivo's by 15%, and Xiaomi's by 7%. In contrast, Huawei and its spinoff brand Honor emerged as the period's winners, with Huawei's shipments skyrocketing by 64% year-over-year and Honor's by 2%.
This sales trend underscores a challenging landscape for Apple in one of its key markets, primarily due to the competitive pressure exerted by local manufacturers and Huawei's strategic moves. Huawei's Mate 60, offering 5G connectivity, surprised the global market, especially considering the U.S. sanctions that had cut off the company from essential chips and technology since 2019. Huawei's recovery indicates a shift in consumer preferences, potentially drawing customers back from Apple.
The backdrop to Apple's sales slump includes disruptions in its supply chain, caused by Covid-19 lockdowns in China in late 2022, which shifted supply dynamics into early 2024. This environment, coupled with Huawei's resurgence, signals a pivotal moment for Apple as it navigates the competitive and rapidly evolving Chinese smartphone market.
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