Can an economical Apple device potentially surpass Huawei's market share in China?
In the same week that Huawei unveiled its foldable trifold flagship device overseas, Apple introduced the affordable, AI-equipped iPhone 16e for just $599. Analysts saw this move as Apple's attempt to boost sales in lower-end markets, with the iPhone 16e replacing the SE series and being the first lower-priced model since 2022.
Archie Zhang, a senior analyst at Counterpoint Research, noted that the iPhone 16e aligns more closely with market demand in the upper mid-end segment. However, China, being a fiercely competitive market, especially in the price range of $599, poses a significant challenge for Apple.
Huawei, Apple's second-largest market challenger in China, has made a remarkable comeback since facing sanctions in 2019. According to data from Canalys, Huawei overtook Apple in market share last year, with 16% compared to Apple's 15%. Despite this, Apple regained the lead in 2023, securing 19% market share, while Huawei dropped to 12%.
In 2023, Apple introduced Apple Intelligence, a new AI service limited to English-speaking markets. However, Apple partnered with Alibaba to roll out its AI features in China, though the release date remains unclear. While Apple's AI rollout has been slow, Huawei faces competition from Chinese brands like Oppo and Vivo, which often offer high-end specs at lower prices.
Globally, Apple's smartphone sales have slowed since peaking in 2022, with its global shipment share falling from 19.3% in 2023 to 18.2% last year.
Huawei, facing export restrictions due to US President Trump's trade policies, relied heavily on domestic chip production for its Mate XT, first launched at the same time as the iPhone 16. With a price tag of $3,673 outside China, the Mate XT is poised as a luxury device. However, Huawei's overseas sales are unlikely to skyrocket due to its reliance on domestic semiconductor production under US restrictions.
Huawei aims to strengthen its market position domestically as it works to stabilize chip production to meet demand for smartphones before expanding further. With Huawei's market share rising and Apple's dwindling, the smartphone market is set for a shakeup.
As of Q4 2024, Huawei holds the top spot in China's smartphone market, with an 18.1% market share, while Apple falls behind with 16.1%. Huawei's success can be attributed to its domestically made Kirin 9020 chip and the popularity of its Mate 70 series and Nova 13 mid-range lineup. Apple's decline is partly due to regulatory issues and the inability to integrate its AI features effectively in the Chinese market until its recent partnership with Alibaba.
Huawei's comeback in the Chinese market is particularly noteworthy, as the spokeswoman stated, given that Huawei regained the lead in market share from Apple in 2023, despite facing sanctions earlier. In the face of this competition, Apple needs to be strategic in its pricing strategy, as the budget-friendly iPhone 16e will be entering markets where Huawei has a strong presence, especially in the $599 price range. Furthermore, Huawei's domestic chip production allows it to offer high-end specs at competitive prices, potentially challenging Apple's position in the Chinese market.
