Apple faces deepening iPhone sales slump in China, further decline expected

Apple Inc. is encountering a significant decline in iPhone sales in China, and the company is anticipated to witness a further drop in volumes throughout the year, according to analysts at Jefferies led by Edison Lee.

In a challenging landscape for Apple Inc., the tech giant is witnessing a notable decline in iPhone sales within the Chinese market, with expectations of further volume reductions throughout the year, according to insights from analysts at Jefferies, led by Edison Lee. This concerning trend follows an atypical sluggish start for Apple’s latest iPhone generation in China, culminating in a substantial 30 per cent year-on-year decline, as reported by Lee and his team, who referenced industry checks for their assessment.

While the broader mobile market in China exhibited growth, with Huawei Technologies Co. emerging as the fastest-growing player, Apple faced headwinds. The recent launch of Huawei’s Mate 60 device lineup, particularly the Mate 60 Pro, fueled a surge in patriotic sentiment among consumers, allowing Huawei to regain some ground it had previously lost to Apple.

Jefferies estimates that Huawei successfully shipped 35 million smartphones in the previous year, although supply constraints imposed limitations on this figure. Conversely, Apple experienced a double-digit percentage drop in volume in the last month, with Jefferies predicting a continued decline throughout the year.

The challenges for Apple in China extend beyond dwindling sales volumes. Discounts on Apple’s smartphone range have increased, evident across various online shopping portals, impacting the average selling price without yielding a corresponding growth in sales volume.

In a parallel development, Hon Hai Precision Industry Co., recognized globally as Foxconn Technology Group, the world’s largest assembler of iPhones, is undergoing a significant change. A long-time executive, Josh Foulger, who served as the country head of Foxconn’s Bharat FIH arm in India, is parting ways with the company after nine years. This transition occurs at a crucial juncture when Foxconn is intensifying its expansion efforts in India.

The competitive landscape shifted when U.S. sanctions severed Huawei’s ties with leading chipmakers, such as Taiwan Semiconductor Manufacturing Co (TSMC), in 2020. This development allowed Apple to gain market share in China. However, Huawei, based in Shenzhen, has orchestrated a remarkable return to competitiveness, reclaiming lost market share. Additionally, Huawei is actively developing its software ecosystem, positioning itself to compete directly with Apple’s iOS and Alphabet Inc’s Android.