Apple’s CEO Tim Cook announced on Thursday that demand for iPhones in China remains strong. This news comes in response to concerns that Apple is losing ground to Huawei and other local smartphone makers in the Chinese market.
According to Cook, Apple set a quarterly record for iPhone sales in mainland China during the September quarter. He also revealed that four out of the top five best-selling smartphones in urban China were iPhones.
Despite the overall contraction in the Chinese smartphone market, Apple appears to have gained market share in the July-September period. Cook said that the company expects to sell more iPhones in the holiday quarter, even though this year’s quarter will have one fewer week of sales compared to the prior year.
Research firm Canalys reported that overall smartphone sales in China fell 3% in July-September compared to the previous year. However, this decline was slower than previous quarters, indicating that the market slump has eased. Canalys also noted that iPhone sales in China decreased by 6%.
In contrast, Huawei’s smartphone sales in China grew strongly in the quarter. The company’s Mate 60 Pro, which uses an advanced China-made chip, gained attention despite facing years of debilitating U.S. sanctions.
While Apple’s overall sales in China dipped by 2.5%, the company attributed this decline to tough Mac computer and iPad sales. Cook clarified that when accounting for foreign-exchange rates, sales in China actually saw growth.
Apple’s sales in China have experienced declines in three out of the four quarters of its 2023 fiscal year, which ended on September 30. However, analysts remain optimistic about the company’s demand outlook in China for the fourth quarter, as they believe the broader smartphone market is rebounding.
A major factor influencing demand for iPhones in China is aggressive discounting by major Chinese online retailers in the lead-up to the annual Singles Day shopping festival. Platforms such as JD.com, Pinduoduo, and Alibaba’s Taobao have offered significant deals on iPhone 15 models, resulting in increased consumer interest.
Apple occasionally allows partner vendors in China to offer discounts to stimulate demand. However, these retailers are also engaged in a “value for money” battle to attract customers.
In response to these trends, research consultancy Counterpoint predicts an improvement in iPhone sales in China during the year-ending quarter, thanks to strong performance during the 11.11 sales event.
Apple’s positive comments about its sales in China came after optimistic statements from its chip supplier Qualcomm, which suggested that the two-year-long slump in the smartphone market is easing, particularly in China. Another wireless connectivity chip supplier to Apple, Qorvo, also reported falling inventory levels at their Chinese customers and its largest bookings quarter in over two years.
Despite Huawei’s re-entry into the market with its own chips, Qualcomm does not expect it to negatively affect its relationship with Chinese smartphone companies.
While Apple continues to face challenges in China, the company remains confident about its prospects in the country and is working to maintain its position in the competitive market.