According to a report by research firm CINNO, Huawei Technologies has overtaken Apple in smartphone sales in China for the first time in 46 months. This victory marks a significant moment for the Shenzhen-based company, which has been under heavy US sanctions but is enjoying a resurgence thanks to its 5G handsets launched last year.
The findings align with data from the China Academy of Information and Communications Technology (CAICT), which revealed a 12.7% year-on-year decline in foreign smartphone shipments, including Apple's iPhones. In August, foreign smartphone shipments dropped to 1.87 million units, down from 2.14 million a year earlier. Meanwhile, domestic smartphone shipments, which include Huawei, rose by 26.7% to reach 24.05 million units in the same period.
Revival of Huawei's handset business
The competition between Huawei and Apple in China, the world's largest smartphone market, has reached new heights. Huawei's success comes as Apple faces challenges on the mainland, with Huawei managing to revive its handset business despite US sanctions. The strong demand for Huawei's high-end smartphones, including its Mate and Pura series and its foldable devices like the Mate XT, has significantly boosted the company's performance.
Research firm TechInsights reported that Huawei's high-end models lifted its average selling price and wholesale revenue to record levels in the second quarter. China remains Huawei's most important market, accounting for 89% of its global smartphone shipments.
The Chinese smartphone market has also been gaining momentum, with more consumers opting for local brands like Huawei. During the year's first half, Huawei led the market with a 17.5% share. According to data from IDC, a global market intelligence firm, total domestic smartphone shipments surpassed 140 million units, representing a 7.7% growth compared to the previous year.
Apple's shrinking market share in China
Apple's recent struggles in China have not gone unnoticed. Huawei's Mate XT 5G smartphone launch coincided with the release of Apple's iPhone 16 series, which debuted in almost 60 countries on the same day. However, despite the global excitement around the new iPhone, Apple dropped out of China's top-five smartphone vendor rankings during the second quarter. Apple's market share on the mainland fell to under 14%, according to IDC.
Apple's revenue in the Greater China region, including mainland China, Hong Kong, and Taiwan, reached US$14.73 billion in the June quarter—a 6.5% decline from the previous year. Analyst Kuo Ming-chi of TF International Securities noted that Apple's iPhone assembly orders remained stable. Despite this, Apple's performance in China has faced challenges, particularly around its new Apple Intelligence system, which will not be available in Chinese until next year.
The outlook for Apple's new iPhone
While Apple's CEO, Tim Cook, remains confident about the company's long-term prospects in China, there are immediate concerns over demand for the iPhone 16 series. Analysts, including Kuo, are paying close attention to how Apple Intelligence, the firm's on-device AI system, will impact US market demand when it becomes available later this year. Kuo maintains his estimate that Apple will produce between 88 million and 89 million units of the iPhone 16 in the fourth quarter of 2024.
As Huawei continues its comeback in China's competitive smartphone market, all eyes will be on how Apple adjusts its strategy to maintain its presence in the country.
