Apple's iPhone shipments in China drop 2% in Q4 as Huawei grows market share

In what has become Apple's third-largest market, the company is grappling with restrictions by some Chinese companies and government agencies on the use of Apple devices. These restrictions mirror U.S. government bans on Chinese apps over security concerns.

Despite being hit hard by U.S. sanctions, Huawei made a strong comeback last year with several new launches. This resurgence has heightened competition in the world's biggest smartphone market, which saw only a 1.2% increase in the last quarter of 2023.

According to IDC, Huawei's shipments surged 36.2% in the final quarter, elevating the company to become China's fourth-largest smartphone vendor. It captured a 13.9% market share, up from 10.3% in the corresponding quarter of the previous year.

For the entirety of 2023, Apple surpassed Vivo to become China's top smartphone seller, holding a 17.3% market share. This achievement marks Apple's first time leading in the Chinese market. However, analysts anticipate renewed pressure on Apple's sales in the coming year.

IDC noted that Apple's dominance in the high-end market segment in China faced challenges due to competitive products and limited upgrades by Apple, diminishing the overall allure of iPhones.

Despite these challenges, Apple continues to draw consumer interest through significant discounts and promotions via third-party distributors. Earlier this month, the company offered unusual discounts on its iPhones, slashing retail prices by up to 500 yuan ($70) in response to increasing competitive pressures.

Jefferies analysts have predicted that Apple's shipment volumes will continue to decline by double digits in 2024. Conversely, Huawei is expected to bolster its market share. They estimate Huawei's global smartphone shipments to reach around 64 million units in 2024, a substantial increase from the fewer than 35 million units projected for 2023.

Overall, China's smartphone market saw a shipment volume of 73.63 million units in the fourth quarter. The total shipment volume for 2023 was 271 million units, a 5% decrease from the previous year, as per IDC. Apple is slated to release its quarterly results next week.