Apple’s iPhone shipments slumped in February, highlighting why CEO Tim Cook went on a charm offensive in China

While Apple remains committed to the Chinese market, the US consumer electronics giant is facing regulatory and competitive headwinds
Official data showed that foreign brands – mostly Apple – shipped about 2.4 million smartphones in February, for a combined 16.9 per cent share of the market

Apple

Kelly Le

Published: 9:00pm, 27 Mar 2024

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Apple’s iPhone shipments in China fell by about one third in February from a year ago, according to official state data released Tuesday, a sign that the US tech giant is losing ground to Chinese smartphone brands in the world’s second-largest economy.

Apple chief executive Tim Cook visited Shanghai last week in an apparent charm offensive to improve relations with Chinese consumers, suppliers and local authorities.

Cook attended the opening of a new Apple Store in Shanghai’s Jing’an district, the largest in Asia, and he also met representatives from three major Apple suppliers in Shanghai, including Wang Chuanfu, chairman and chief executive of the world’s largest electric vehicle maker BYD. On Sunday, he was in Beijing for the China Development Forum, where he told state media CGTN, “I love China. I love the people”.

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While Apple remains committed to the Chinese market with its large base of Apple fans, the US consumer electronics giant is facing regulatory and competitive headwinds. There have been anecdotal reports that some Chinese government agencies and offices have banned the use of iPhones, even though the Chinese government has denied the existence of such regulations or policies.

China’s official data showed that foreign brands shipped about 2.4 million smartphones in February, for a combined 16.9 per cent share of the Chinese market. Given that Apple is the most significant foreign player in the country, it translates into a drop of about one-third from the prior month.

In January, Apple shipped about 5.5 million units, down 39 per cent year on year, according to data from the China Academy of Information and Communications Technology, a Chinese government-backed think tank.

The iPhone maker said on Tuesday that it plans to unveil its long-awaited artificial intelligence (AI) strategy at its annual Worldwide Developers Conference which starts June 10. Apple is expected to launch major software updates for all its smart devices, and outline a new AI strategy based around the iOS 18 upgrade.

At the same time, Apple is expected to look for a local AI partner for the Chinese market, with China’s search engine giant Baidu reportedly chosen as the AI supplier for iPhones in the country. However, China Daily, the official English language state newspaper, said Apple and Baidu have not reached a deal, citing unidentified sources.

Chinese smartphone brands including Honor and Xiaomi introduced their generative AI products at annual trade show MWC Barcelona in Spain late last month.

Apple has tried to turn the tide of declining shipments of iPhones in the Chinese market by reassuring its commitment to long-term development in the world’s second-largest economy.

Apple CEO Tim Cook speaks at the China Development Forum in Beijing, March 24, 2024. Photo: Reuters

Cook reiterated Apple’s commitment to invest in research and development (R&D) and the supply chain in China when he met China’s commerce minister Wang Wentao last Friday, according to a statement from the Ministry of Commerce.

Apple said it plans to expand its applied research centre in Shanghai to support all of its product lines, as well as establish a new R&D lab in the southern tech hub of Shenzhen later this year for key products, including the iPhone, iPad and Vision Pro mixed-reality headset, according to the company.

Chinese sales of the iPhone fell by nearly a quarter in the first six weeks of 2024 over the same period last year, ranking the US firm fourth after Vivo, Huawei and Honor, according to data from Counterpoint Research.

Huawei Technologies was the biggest winner, posting a 64 per cent jump in sales for the six week period, driven by strong demand for its flagship 5G Mate 60 Pro smartphone with a powerful home-grown chip.