Apple is facing challenges in the Chinese smartphone market, struggling to find a way to rebound amid intense competition from local companies. If Apple cannot recover in China, it is expected to impact the company’s overall performance negatively.
According to market research firm Canalys, Apple’s iPhone sales in China for the second quarter of this year were about 9.7 million units, a 6.7% decrease compared to 10.4 million units in the same period last year. Apple’s market share dropped from 16% to 14% during this period. This marks the first time Apple fell out of the top five in market share rankings in nearly four years.
This decline in market share is attributed to the growing preference for local Chinese smartphones that began early last year. Companies like Vivo (19%), Oppo (16%), Honor (15%), Huawei (15%), and Xiaomi (14%) have quickly filled the gap left by Apple. Despite launching an unusual discount campaign to boost iPhone sales earlier this year, Apple could not counter the aggressive competition from Chinese competitors.
The market sees Apple’s AI system, Apple Intelligence, as a crucial factor in boosting iPhone sales in China. It is the only card to counter the local “patriotic consumption” trend. Canalys stated that local brands such as Huawei, Honor, Oppo, and Vivo lead the market by incorporating generative AI. They noted that localizing the Apple Intelligence service in China will be necessary for Apple.
However, the issue is that the launch timing of the AI iPhone, seen as the key to recovery, is uncertain. In China, launching generative AI chatbot services requires approval from the authorities. As of this year, the Chinese internet regulator, the Cyberspace Administration of China (CAC), has not approved any foreign generative AI models. It is known that models unable to align with the values of the Chinese Communist Party are rejected. Although Apple is reportedly searching for local partners to integrate AI models into its products, no significant progress has been made.
As of now, the timing for launching AI features remains unclear. According to reports from Bloomberg and other foreign media, Apple will not include Apple Intelligence in the next-generation iPhone 16 at launch. The AI features are expected to be introduced through an update about a month after the release, but the exact timing is still unknown.
If Apple cannot reverse its declining iPhone sales in China, it could significantly affect its overall revenue. China is a crucial market for Apple, contributing more than 15% of the company’s total revenue. In the first quarter of this year, Apple reported revenue of $90.75 billion, a 4% decrease compared to last year. During this time, iPhone sales in China plunged by 19.1%, according to Counterpoint Research, and revenue from Greater China dropped by over 8% to $16.37 billion.
Most Commented