Apple’s iPhone falls out of top 5 in China as domestic brands take over high-end market

Customers try out the Apple Vision Pro at an Apple Store on Wangfujing Street in Beijing, as the product officially goes on sale on June 28, 2024, in China. (Photo: Li Hao/GT)

Apple was edged out of the top five smartphone vendors in China in the second quarter, as competition from Chinese domestic brands intensified, according to global research firms.

The trend shows that with domestic handset makers surging ahead, the focus of competition among leading smartphone brands in the domestic market has subtly shifted from shipment volumes to high-end offerings, analysts said.

A report released on Friday by research firm IDC said that the Chinese original equipment manufacturers - particularly Vivo, Huawei, and Xiaomi - with large double-digit growths, were the biggest contributors to the increased momentum in the second quarter.

This led to pushing Apple into the sixth position and allowed local players once again to dominate the top five spots after a hiatus of nearly four years.

Research firm Canalys also reported that Apple's iPhone ranked sixth in the Chinese mainland smartphone market, with a share of 14 percent, down by two percentage points year-on-year, following its Chinese rivals Vivo, Oppo, Honor, Huawei Technologies, and Xiaomi.

According to Canalys' latest report issued on Thursday, Vivo reclaimed the No.1 spot by shipping 13.1 million units, capturing a 19 percent market share. The growth was driven by strong performances in brick-and-mortar channels and robust online sales during this year's June 18 (618) e-commerce shopping gala.

Canalys analyst Lucas Zhong said it was the first time domestic vendors dominated all the top five positions in one quarter, showing that Chinese vendors' strategies for high-end products and their deep collaboration with local supply chains are starting to pay off in hardware and software features.

In the second quarter, iPhone shipments in China totaled 9.7 million units, down from 10.4 million units a year earlier, despite experiencing strong year-on-year growth in shipment volumes in China in April and May, according to Canalys.

Observers said that in recent years, Apple has built strong competitiveness in the Chinese market, fueled by the ongoing market openness and industrial upgrades. This also spurred the growth and strengthening of Chinese smartphone brands.

Canalys noted that Chinese companies are investing in artificial intelligence infrastructure and developing proprietary models to gain a competitive edge in the high-end segment. This fierce domestic competition also drives their expansion into international markets, with milestones expected throughout 2024.

Apple offered its largest-ever price cuts during the 618 shopping event to boost sales, with some iPhone models discounted by over 2,000 yuan ($276). This strategy secured the top spot for Apple on JD.com's smartphone sales rankings but did not reverse the overall decline in iPhone sales for the second quarter.

Chinese domestic smartphone producers are making significant strides in the high-end market. Canalys analysts noted that in the second half of the year, the market will closely monitor Huawei's launch of HarmonyOS Next, as the company aims to establish it as a third major mobile operating system alongside Android and iOS.