Apple's iPhone Decline: Huawei's Strength Surges Amid Sanctions

iPhone sales fell 19.1 percent in China, while demand for Huawei smartphones has seen steady growth, new statistics show

by Sededin Dedovic
Apple's iPhone Decline: Huawei's Strength Surges Amid Sanctions
© DrTech / Youtube channel

The winds of change are blowing through the Chinese smartphone market, and market dominance and influence is rapidly changing. A recent report from Counterpoint Research paints a picture of a changing landscape, with Apple experiencing a significant decline and homegrown giants such as Huawei making a remarkable comeback.

This resurgence is largely attributed to the success of the Huawei Mate 60 series, especially the Mate 60 Pro, which boasts a top-of-the-line 5G chip.

Apple's stumbling step

Apple, once the dominant force in the Chinese market, experienced a dramatic decline in iPhone sales of 19.1% in the first quarter of 2024 compared to the same period last year.

This decline comes amid sluggish overall market growth of just 1.5%. Analysts highlight the increasingly intense competition from domestic brands, especially the Huawei Mate 60, as the main factor in reducing Apple's market share.

On the other hand, Huawei is experiencing a phenomenal rise in smartphone sales, a staggering 69.7% increase in the first quarter of 2024. This remarkable turnaround can be partially attributed to the much-anticipated Mate 60 series, which boasts a powerful domestically developed 5G chipset.

Sanctions imposed by the US in 2019 significantly crippled Huawei, but the Shenzhen-based company seems to be getting back on its feet. Counterpoint Research shows that Huawei has risen to the fourth position among the largest smartphone manufacturers in China, putting significant pressure on Apple, which currently holds the third place.

People look at the new Mate 60 smartphone and other products at a Huawei flagship store after the company unveiled new products © Kevin Frayer / Getty Images

This change in market dynamics had a ripple effect, causing Apple's stock price to fall slightly.

Ivan Lam, senior research analyst at Counterpoint Research, points to the growing resistance of Chinese consumers to foreign brands. He suggests that Apple needs to adapt its strategy to navigate this changing landscape. All this led to a slight drop in Apple shares during yesterday's dream, according to CNBC.

"Huawei's return to the market clearly shows the resistance of Chinese consumers to foreign brands," said senior research analyst Ivan Lam of Counterpoint Research. "Apple may also need to think about a strategy to deal with these changed market dynamics.

A new color palette, more aggressive pricing and a focus on artificial intelligence features could help Apple regain lost territory," Lam continued.

The AI imperative

Looking ahead, Counterpoint analysts predict a moderate growth trajectory for China's smartphone market in 2024.

They point to the integration of artificial intelligence (AI) as a key driver of this growth. Leading Chinese manufacturers such as Xiaomi and Oppo have already incorporated the latest Qualcomm Snapdragon 8 Gen 3 processor, specially designed for AI applications, into their flagship models.

In addition, Honor, a former subsidiary of Huawei, introduced an AI eye-tracking feature in its latest flagship phone, the Magic6 Pro, allowing users to control their cars with their eyes. The research suggests that the upward trend in domestic phone sales in China is likely to continue and potentially extend to lower-end phone segments.

However, a point of contention remains regarding the technological prowess of Huawei's homegrown chip. US Commerce Secretary Gina Raimondo, in a recent interview, downplayed the capabilities of the chip in the Huawei Mate 60 Pro, claiming it was several years behind US technology.

Despite the ongoing sanctions, Huawei has persistently launched new phone models, albeit with domestically produced processors. The Mate 60 Pro series was meant to symbolize China's technological independence in the face of US sanctions.

However, Raimondo claims that the sanctions are working, citing the chip's inferiority to its American counterparts. The US has been actively trying to curb China's access to advanced technology for years, citing concerns about its potential military applications.

It is interesting that Huawei recently presented its first AI-powered laptop equipped with an Intel chip, which clearly tells us how complex the technology supply chain is. China's smartphone market is witnessing a fascinating power shift.

The success of the Huawei Mate 60 Pro, with a domestically produced 5G chip, marks a potential turning point in the market. In the midst of the increased development of Artificial Intelligence, it is desirable to create strong competition because when this kind of "race" is involved, end users often get lower prices for products.

According to CNN, Counterpoint's data came just days after another market research firm IDC said that Apple's global smartphone sales fell 10% in the first quarter, largely due to a loss of momentum in China. China is Apple's biggest market after the United States, but the company is facing challenging times in the world's second-largest economy.

Chinese consumers, who once favored Apple, are now increasingly turning to Chinese brands. Overall smartphone sales in China rose 1.5% in the first quarter, according to Counterpoint. Local smartphone manufacturers Vivo and Honor were the two leading brands in terms of market share.

Apple Huawei China