Apple's China Market Share Decline: Analyst Flags Shipping Momentum Challenges

Apple Inc. (AAPL) is facing a potential decline in its market share in China, with analysts warning that some iPhone models could face shipping momentum challenges. The decline in iPhone shipments, coupled with increased competition from local brands and economic slowdown, has raised concerns about Apple's future in the world's largest smartphone market.



According to supply chain analyst Ming-Chi Kuo, Apple has been cautious in discussing its 2025 iPhone production plans with key suppliers. Despite the expected launch of the new iPhone SE 4, Kuo forecasts a 6% year-over-year decline in shipments for the first half of 2025. He also expects Apple's market share to continue to decline, attributing this to the thin design of two upcoming iPhone models, which may only support eSIM, a feature not widely promoted in the Chinese market. "These two models could face shipping momentum challenges unless their design is modified," he said.

The decline in iPhone shipments in China is not a new phenomenon. In December 2023, overall smartphone shipments in China remained stable year-over-year, but iPhone shipments saw a decline of 10% to 12%. Kuo pointed out that Apple's on-device artificial intelligence feature, Apple Intelligence, has yet to drive hardware upgrades or boost services revenue. For 2024, Apple's estimated iPhone shipments were around 220 million units, with projections for 2025 ranging from 220 million to 225 million, falling short of the market consensus of 240 million or more, according to Kuo.

Apple's challenges in China are not limited to iPhone shipments. In November 2023, sales of foreign phone brands in China plunged, underscoring further pressure on Apple. According to official data, foreign mobile phone shipments in China stood at 3.04 million units in November, a fall of 47.4% from November 2023 and a 51% drop from October last year.



Apple's market share decline in China can be attributed to several factors, including increased competition from local brands, nationalism and economic slowdown, price sensitivity, and the challenges posed by the thin design and eSIM feature of upcoming iPhone models. To mitigate these challenges, Apple can employ strategies such as price adjustments, localization and customization, investment in R&D and innovation, strengthening partnerships with local suppliers, expanding distribution channels, and addressing geopolitical tensions.

In conclusion, Apple is facing a potential market share decline in China amid declining iPhone shipments. Analysts have flagged shipping momentum challenges for some iPhone models, highlighting the need for Apple to address these issues and adapt its strategies to better compete in the Chinese market. As the world's largest smartphone market, China remains a crucial market for Apple, and the company must take steps to maintain its competitive position and reverse the decline in its market share.