During the first week of January, Apple experienced a more than 30% year-over-year decline in iPhone sales in China, in stark contrast to competitors like Xiaomi and Huawei, which maintained flat sales, as per a recent note from Jefferies analysts.
Jefferies analysts anticipate a double-digit drop in Apple’s iPhone volume in China for the entirety of this year, with expectations of heightened revenue pressure in the Chinese market throughout 2024.
This assessment follows a challenging start to the year for Apple, marked by share declines triggered by downgrades from Barclays and Piper Sandler, warnings from key supplier Foxconn about a decline in first-quarter revenue, and reports of an impending antitrust lawsuit by the U.S. government.
The note indicates that Huawei gained the most smartphone market share in China in 2023, rising approximately 6% year over year. In contrast, Apple’s market share in China fell around 4% year over year.
The analysts highlighted iPhone’s lower market share year over year in China as a negative surprise, attributing the cannibalization to competition not just from Huawei but also from Xiaomi and other players in the market.
In response to these challenges, Apple seems to be increasing iPhone discounts in China as part of its strategy to defend its market share. The analysts observed a significant rise in discounts for certain iPhone 14 models in China during the previous week, while some existing discounts were further amplified.
As of the premarket trading session, Apple’s shares were down by less than 1% before the company announced the release date of its Vision Pro headset, closing up more than 2%.
