Apple Faces Growing Competition from Huawei and Honor in China's High-End Smartphone Market

Apple's dominance in China's high-end smartphone market is being challenged by local competitors, particularly Huawei and its spin-off brand, Honor, according to recent data from industry consultancy IDC. Despite an overall increase in smartphone shipments in China, Apple saw a decline in iPhone shipments in the first quarter, dropping from 14.7 million to 10.8 million devices.

"Apple faces increasing competition despite its strategy to prop up sales by cutting prices," noted Antonio Wang, vice-president of IDC China. The US tech giant's market share fell to 15.6 per cent from 17.8 per cent a year earlier, while Honor and Huawei captured 17.1 per cent and 17 per cent of the market, respectively.

Foldable phones and artificial intelligence (AI) features are expected to drive competition in the high-end smartphone market, with handsets incorporating these technologies poised to boost sales. While Chinese manufacturers lead in integrating AI features, Apple is yet to fully embrace generative AI, although it is anticipated to unveil its AI strategy during its upcoming developers' conference in June.

"Apple is also exploring a tie-up with Chinese web search and AI giant Baidu to install the latter’s Ernie chatbot on iPhones sold in China," according to a report by The Wall Street Journal.

Despite facing challenges in China's overall smartphone market, Apple maintains its lead in the premium segment, comprising handsets priced over US$600. However, its market share in this segment has declined to 58 per cent from 70 per cent a year ago, largely due to economic factors prompting consumers to consider budget phones and intensified competition from Huawei and Honor.

"Huawei’s comeback has disrupted the market equilibrium," said Wang. Huawei's share in the high-end market rose to 20 per cent in the past quarter, driven by strong demand for its 5G-enabled Mate 60 series, while Honor's share reached 9 per cent.

Globally, smartphone shipments rebounded by 7.8 per cent year-on-year in the first quarter, marking continued growth for the third consecutive quarter, according to IDC.

By fLEXI tEAM