According to Jefferies analysts, Apple iPhone sales in China dropped by 30% in the first week of 2024. That’s a significant drop for the world’s largest smartphone market and signals growing competitive pressures from domestic rivals such as Huawei (HWT.UL) for the U.S. tech giant.
The brokerage said that the decline in Apple’s sales was the primary catalyst for a double-digit drop in China smartphone shipments for the first week, citing industry checks. Other Android brands and Huawei achieved relatively flat growth. “We expect the iPhone’s China sales decline to deepen throughout the year and that Apple is unable to reclaim its lead in the Chinese smartphone market,” said analyst Edison Lee and colleagues, quoted by Bloomberg.
In the face of a broader weakening global economy, Apple’s new iPhone models have struggled to spark demand in the region. This has been compounded by Beijing’s decision to expand a ban on using iPhones in some departments of government-backed agencies and state companies and its probe into taxes and land use at Foxconn, Apple’s most crucial manufacturing partner.
Investors also have reason to be concerned about the impact of increasing trade friction between the United States and China on the Chinese smartphone market. Last week, the U.S. imposed tariffs on $200 billion worth of Chinese imports in retaliation for Beijing’s refusal to halt its probe into the tax and land-use deals at Foxconn. That move could hurt Apple’s supply chain and cause delays in delivering the latest iPhone models to customers in China.
It remains to be seen whether launching a new line-up of iPhones in late September can reverse the trend, but many analysts are skeptical. They note that the company’s Mac and iPad lineups have yet to receive any significant updates this year, which usually help to bolster demand at this time of year. They also point to the limited success of the new Apple Watch model, launched with only minor upgrades.
Adding to the woes, Apple’s new iPhones were not discounted in any meaningful way during this past week’s shopping holidays in China, which usually stimulates smartphone sales. That may be one factor behind the double-digit decline forecast by analysts for Apple’s shipments in China this year. Meanwhile, Huawei has been gaining ground in the country’s smartphone market thanks to its popular Mate 60 series devices that feature a made-in-China processor.
