Apple Slashes iPhone 16 Prices Amid Tepid China Demand and Rising Huawei Competition

Reports indicate that ahead of the official launch of Apple's (AAPL.US) iPhone 16 series, Chinese online retailers have already begun offering discounts. This early price reduction is seen as a reaction to tepid demand within the region, which is the world’s largest and most competitive smartphone market.

Pinduoduo (PDD.US) offers the iPhone 16 Plus with 512GB of storage at a discounted price of RMB 8999, approximately 10% less than the official price. A similar discount applies to the 128GB model, with an even steeper cut of 11%. Meanwhile, both Pinduoduo and Alibaba's (BABA.US) Taobao are providing a 4% discount on the iPhone 16 Pro Max, dropping its price by RMB 400 to RMB 9599. Additionally, Alibaba’s Tmall platform allows buyers to make 24 interest-free installment payments.

The iPhone 16 series, which officially goes on sale on September 20th, is not yet equipped with the new Apple Intelligence AI service. English versions of this technology are scheduled for a December release, with other languages including Chinese expected next year.

Industry analysts highlight that competition in China’s smartphone market remains fierce, with local challengers such as Huawei making significant gains. This is evidenced by research showing Huawei’s year-on-year smartphone shipment increase of 41% in Q2 2024, while Apple experienced a slight decline in the same period.

Speculation arises as reports suggest iPhone 16 pre-orders in the initial weekend are approximately 12.7% lower than the previous iPhone 15 series. Concerns are further fueled by early user feedback and benchmark data suggesting only modest performance improvements despite the new A18 processors. These findings have led to skepticism about the lineup’s appeal beyond the Pro models.

As Apple navigates these challenges, potential underperformance in the Chinese market looms large due to the absence of AI features in new devices. Despite this, Apple can leverage its well-established strategy of price adjustments, historically proven to bolster sales by appealing to price-sensitive consumers.

Ultimately, while iPhone 16 may experience softer sales, Apple's steadfast brand loyalty and strategic pricing could mitigate potential downturns, sustaining its stronghold in the premium smartphone segment in China.