Apple (NASDAQ: AAPL) faced a challenging 2024 in China, with annual iPhone sales plummeting to their lowest levels since 2016.
The slide comes after a report from Canalys, a market research firm, which revealed that the tech giant slipped to third place in the fiercely competitive Chinese smartphone market, overtaken by domestic players Vivo and Huawei.
The company’s annual shipments fell by 17%, with a steep 25% year-over-year decline in the fourth quarter, despite aggressive promotional efforts.
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Apple’s stock reflected these challenges, with shares closing down 4% on January 16 at $228.26. This marks a nearly 12% decline from its December peak of $259, raising concerns among investors about its performance in one of its key markets.
The decline in iPhone sales coincided with a resurgence of Chinese smartphone manufacturers. Vivo led the market with a 17% share, shipping 49.3 million units in 2024, while Huawei claimed second place with 46 million units, registering an impressive 37% annual growth.
Apple’s 15% share placed it behind these competitors, closely followed by OPPO and HONOR, also with 15% shares. Xiaomi recorded the highest growth among the top five vendors in the fourth quarter, with a 29% year-over-year jump in shipments.
China’s smartphone market recovers, But Apple struggles
China’s smartphone market shipped 285 million units in 2024, marking a 4% year-over-year growth after two years of decline. The recovery was fueled by government subsidies, strategic investments, and technological innovations by vendors.
Vivo and Huawei capitalized on these trends, offering affordable yet feature-rich devices, foldable form factors, and improved operating systems. Huawei’s HarmonyOS NEXT and Xiaomi’s HyperOS have attracted high-end users and driven them to upgrade their devices.
Despite this recovery, Apple struggled to maintain its foothold in the high-end segment. The absence of advanced AI capabilities in iPhones sold in China, where ChatGPT and similar technologies remain unavailable, further weakened its competitive position.
Ming-Chi Kuo, a prominent Apple analyst, highlighted that Apple Intelligence has yet to show any measurable impact on hardware replacement cycles or service business growth.
Kuo forecasts a 6% decline in iPhone shipments for the first half of 2025, with the second quarter expected to bear the brunt.
“Even with the new iPhone SE4 (expected to launch around mid-1H25), iPhone 1H25 shipments are projected to decline by about 6% YoY. (1Q25 shipments were roughly flat YoY due to front-loading in January ahead of Trump’s tariff policy, while 2Q25 is expected to decline.)”- the analyst noted
Outlook for 2025
Apple’s recent challenges in China, combined with broader international headwinds, paint a cautious outlook for its stock performance in 2025.
While Canalys projects China’s smartphone market to exceed 290 million units in 2025, Apple’s declining iPhone sales, pressured by intensifying competition, a lack of AI-driven upgrades, and persistent macroeconomic challenges, highlight ongoing hurdles for the tech giant.
The anticipated launches of the iPhone SE4 and the ultra-thin iPhone 17 may provide temporary boosts. However, analysts warn of potential shipping hurdles in China, where domestic brands are steadily gaining ground along with competitive pricing.
As Apple navigates these challenges, its January 30 earnings report will be critical in outlining its strategy to recover market share in key regions. For now, the company’s cautious production outlook and mounting competitive pressures suggest a tough road ahead for its stock in 2025.
Featured image via Shutterstock
