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Apple has fallen from China’s top five phone manufacturers after spending years among the biggest brands.
Canalys researchers have estimated that Apple dropped to sixth place in the second quarter with 14% market share, a two-point drop from the same time last year.
The fall put it just below Xiaomi, which climbed from 13% to 14% over a similar period. Vivo leads with 19% share, while Oppo (16%), Honor (15%), and a resurgent Huawei (15%) occupied the rest of the leaderboard.
Analyst Lucas Zhong noted that this was the first time the top five phone brands in China were all domestic.
Multiple factors played into the changing mobile landscape. Xiaomi thrived in part because its first EV, the SU7, helped spur sales. Oppo recently released the Reno 12, while Honor has one of the strongest foldable phones in the Magic V3. All these companies have the advantage of deep hooks in Chinese supply chains.
Apple, meanwhile, is dealing with a “bottleneck,” according to Zhong. It has a healthy supply, but it’s hoping to stabilize prices and protect stores’ profits.
Canalys saw Chinese phone sales finally recovering in step with the rest of the world, although it might only see a “modest” improvement for all of 2024.
Just how the market will evolve isn’t clear. Huawei is making a large bet on HarmonyOS Next as a viable alternative to Android and iOS, while multiple brands in China are pouring resources into AI and expanding internationally.
Apple’s dip is somewhat expected. The middle of the year is historically weak for iPhone sales as the novelty of the latest devices wears off and some customers wait for the usual September refresh. Apple had also reported an 8% drop in revenue from mainland China in its latest earnings.
However, the exit from the top five illustrates how challenging China has become for foreign phone producers. It can be difficult for them to compete on price given supply chain disadvantages, and customers skew toward local companies much as Americans often choose Apple. Canalys believes that a timely Chinese rollout of Apple Intelligence might be vital to recovering some share.
To that end, Apple has shifted its priorities slightly toward India, including domestic manufacturing and more aggressive pricing. The move could help Apple reduce its dependence on China for both sales and factories.
