In the second quarter, Apple lost its position in the top five smartphone vendors in China due to fierce competition from domestic brands like Huawei. Apple’s market share dropped to 14%, a decline from 15% in the previous quarter and 16% from the same period last year. This marks a significant shift as Apple, once the third-largest smartphone vendor in China, fell to the sixth position with about 9.7 million shipments.
For the first time in history, all of the top five positions in the Chinese smartphone market were dominated by domestic vendors. This indicates a change in consumer preferences and a growing competition within the industry. Chinese vendors are implementing strategies for high-end products and collaborating closely with local supply chains to enhance their hardware and software features. Honor’s latest Magic V3, leveraging GenAI, has particularly improved the user experience of foldable devices.
Apple is facing challenges in the Chinese market, particularly in stabilizing retail prices and protecting channel partner margins. This has led to a decline in their shipments over the past few quarters. Canalys suggests that localization of Apple Intelligence services in China could be a crucial move in the next year as Chinese brands are rapidly integrating generative AI into their products.
During the second quarter, Vivo reclaimed the top spot with a 19% market share and 13.1 million units shipped, driven by strong sales during the “618” e-commerce festival. Oppo maintained second place with 11.3 million units, while Huawei spinoff Honor came in third with 10.7 million units shipped. Huawei secured the fourth position with a 15% market share, witnessing a resurgence in their consumer business after the launch of the Mate 60 smartphone. Xiaomi rounded up the top five with solid sales of its K70 and flagship 14 series, boosted by the buzz around its first electric car, the SU7.
Despite the reshuffling in the top positions, the Chinese smartphone market saw a 10% year-on-year growth in the second quarter, with shipments exceeding 70 million units. This growth indicates a strong demand for smartphones in China, creating opportunities for both domestic and international vendors to tap into this lucrative market.
The rapidly evolving Chinese smartphone market presents both challenges and opportunities for vendors, as consumer preferences shift and domestic brands gain momentum. It will be crucial for Apple and other international players to adapt to the changing landscape and innovate their products and services to stay competitive in this dynamic market.
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