The Rise of Chinese Smartphone Vendors and Apple’s Decline in China

Apple, once a dominant player in the Chinese smartphone market, has been edged out of the top five vendors list in the second quarter. According to a Canalys report, Apple’s market share in China shrank to 14% from 15% in the first quarter and 16% in the same period a year ago. This marks a significant decline for the iPhone maker, dropping to the sixth spot with about 9.7 million in shipments.

“It is the first quarter in history that domestic vendors dominate all the top five positions,” said Lucas Zhong, research analyst at Canalys. Chinese vendors have been gaining ground in the market, with their strategies for high-end products and deep collaboration with local supply chains paying off in hardware and software features. For example, Honor’s latest Magic V3, which leverages GenAI, has significantly enhanced the user experience of foldable devices.

On the other hand, Apple is facing a “bottleneck” in the Chinese market as it aims to stabilize retail prices and protect margins of channel partners. Canalys suggests that localization of Apple Intelligence services in China will be an important move in the next 12 months, as Chinese brands are aggressively incorporating generative AI into their products.

During the second quarter, Vivo reclaimed the top spot with 19% market share and 13.1 million units shipped, driven by strong offline and online sales during the “618” e-commerce festival. Oppo maintained second place with 11.3 million units, buoyed by the launch of its new Reno 12 series. Huawei spinoff Honor came in third with 10.7 million units shipped, marking a 4% year-on-year increase. Huawei itself came fourth with 15% market share and 10.6 million shipment units, a significant improvement from the previous year. Xiaomi took the fifth spot, with solid sales of its K70 and flagship 14 series, as well as the buzz from its first electric car, the SU7.

Overall, the Chinese smartphone market grew 10% year on year in the second quarter, with shipments exceeding 70 million units. This growth is a testament to the innovation and competitiveness of domestic brands like Huawei, Oppo, Vivo, Honor, and Xiaomi, which are increasingly challenging the dominance of international players like Apple in the market. The rise of Chinese smartphone vendors and Apple’s decline in China reflect the evolving dynamics of the global smartphone industry.