Apple falls: iPhone maker drops out of China’s top 5 as Huawei rises

Apple has fallen out of the top 5 smartphone vendor rankings in China, according to data trackers, marking the first time in years that the iPhone maker has fallen so far in one of its most important markets.

iPhone shipments in China in the three months ended June fell 2% from a year earlier, pushing Apple to sixth place on Canalys’ list of top vendors by shipments, behind Vivo, Oppo, Honor, Huawei Technologies and Xiaomi, according to a report from the market research firm on Thursday.

“This is the first quarter in history where domestic suppliers dominate all top five positions,” wrote Canalys analyst Lucas Zhong. “In contrast, Apple is facing a bottleneck in mainland China.”

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China’s smartphone market, the world’s largest, is fiercely competitive, with the top six brands competing for about 95 percent of the market. Apple is the last foreign brand left in this group after Samsung Electronics lost its relevance.

iPhone sales have fallen in China this year amid stiff competition from local vendors including Huawei, which has enjoyed a resurgence in the high-end smartphone market thanks to an advanced processor produced entirely in China that has sparked patriotic fervor in the country.

“In the first half of the year, Huawei was the market leader despite U.S. trade restrictions, further closing the gap with Apple in the >$600 segment,” Arthur Guo, a senior analyst at research firm IDC, wrote in a report published Friday.

Apple did not immediately respond to a request for comment on Friday.

Huawei, Vivo and Xiaomi all posted double-digit year-over-year growth in the second quarter, according to Canalys and IDC.

While the Android smartphone market in China grew 11.1%, Apple’s shipments this quarter fell 3.1% from the same period last year, despite promotions that helped improve iPhone demand in the country, according to IDC, which also ranked Apple sixth in market share for the quarter.

According to IDC data, Apple last dropped out of the top five in the third quarter of 2020, Guo said in a written response to questions.

A separate report from research firm Counterpoint that tracks sales rather than shipments offered a more optimistic outlook for Apple, putting the iPhone maker in second place in China in the quarter with a 15.5% market share. It was closely followed by Huawei at 15.4%, Xiaomi at 15.3% and Honor at 15.2%.

“Despite a single-digit decline year-over-year, Apple’s performance in Q2 remains impressive,” said Ivan Lam, senior analyst at Counterpoint. “However, Apple is expected to experience a traditional decline in Q3 as consumers waiting for the iPhone 16 launch may delay their upgrades.”

Apple has repeatedly offered discounts this year, as steep as 23 percent at one point, through local retailers. It’s an important market for the tech giant as it tries to navigate the choppy waters of rising tensions between the U.S. and China.

Apple Chief Operating Officer Jeff Williams visited China this week, meeting with officials in Beijing and Shenzhen, where he promised to deepen the Cupertino, California-based tech giant’s cooperation with the country.

In Beijing, Williams was among American executives who met with Chinese Vice Premier He Lifeng and Foreign Minister Wang Yi on Monday as part of the first U.S. business delegation to visit China after a key Communist Party meeting this month that also included executives from FedEx and Micron.

Williams also met with Meng Fanli, the Communist Party secretary of Shenzhen. The executive reportedly told Meng that Apple would increase its investment in the southern Chinese tech hub, praising the city’s smartphone supply chain.

With information from the South China Morning Post