With declining iPhone sales, Apple has been facing challenges in the Chinese market. Analysts expect this trend to continue and deepen through 2024 as Huawei’s latest home-grown lineup gains strong traction among Chinese consumers. This article will explore the reasons behind this projected decline, including Huawei’s growth, supply constraints, patriotic fervor, and Apple’s challenges in the Chinese market. Additionally, we will explore Huawei’s comeback and its development of HarmonyOS, an operating system designed to rival both iOS and Android.
Apple experienced a 30% year-on-year decline in iPhone sales in China in December of the previous year. This decline occurred while the rest of the market grew, with Huawei being the fastest-growing company, primarily driven by its latest Mate 60 lineup. The decline in iPhone sales is expected to continue, and Jefferies analyst Edison Lee projects a double-digit fall in iPhone sales for 2024.
One of the key factors contributing to Apple’s declining iPhone sales in China is Huawei’s strong growth. Despite supply constraints, Huawei managed to ship 35 million smartphones last year. The company’s success can be attributed to a patriotic fervor surrounding the phone, with Chinese consumers opting for a home-grown brand. Huawei’s latest Mate 60 lineup, released in September, showcased advanced semiconductor manufacturing capabilities using a new China-made 7-nanometer processor tailored for the local market.
US sanctions to prevent Huawei’s technological advancement have inadvertently contributed to the company’s success in the Chinese market. With the restrictions on access to US-made semiconductors, Huawei has turned to local manufacturing and developed its processors. These advanced semiconductor manufacturing capabilities have propelled Huawei’s growth and challenged Apple in the Chinese market. Supply constraints have also played a role, preventing Huawei from reaching even greater heights.
Apple has resorted to offering discounts on its smartphone lineup across various online merchants to counter the decline in iPhone sales. However, this strategy will impact the average selling price without significantly stimulating volume growth. As a result, Apple is likely to face a double-digit fall in iPhone sales in 2024.
China’s decision to ban iPhones from the offices of multiple government agencies and state-owned companies has further hampered Apple’s sales in the country. China has many state-owned enterprises in various sectors, such as power generation, seaport construction, mining, manufacturing, education, and investment markets. The ban on iPhones in these entities directly affects Apple’s market penetration and sales.
Despite the challenges faced by Apple, Huawei’s comeback seems unstoppable. The Chinese company continues to develop and extend its operating system, HarmonyOS, specifically designed to rival iOS and Android. HarmonyOS offers Huawei an opportunity for increased independence from US technology, ensuring the sustainability of the company’s growth in the Chinese smartphone market.
In conclusion, Apple is projected to continue experiencing declining iPhone sales in China, primarily due to the intense competition posed by Huawei’s latest lineup and its locally tailored advancements in semiconductor manufacturing. US sanctions and supply constraints unintentionally contributed to Huawei’s success, while Apple’s discount strategy and the Chinese government’s ban on iPhones further hindered the company’s performance. Meanwhile, Huawei’s comeback is expected to continue, driven by the development of HarmonyOS, its rating system designed to rival both and Android.
