According to two recently published studies, Apple has dropped to third place after Chinese smartphone brands.
The change in market rankings comes as China faces a severe economic slowdown and as Covid restrictions have slowed consumer spending.
According to Counterpoint Research, smartphone sales in China fell 14% in the first quarter and are close to the level in Q1 2020 due to the severe impact of the pandemic.
Counterpoint Research adds that Apple’s sales fell 23% from the previous quarter to March 2022. The company enjoyed rapid growth in China last year, shortly after the launch of the iPhone 13.
Apple’s market share in China is now 17.9%, compared with 21.7% in the previous quarter.
In another recent study by research firm Canalys, Apple has fallen from the leading position in the Chinese market to third place. In which, the first quarter shipments decreased by 36% compared to the previous quarter. Canalys tracks manufacturers’ shipments to retailers instead of sales to consumers.
Apple is not the only victim, but it is the hardest hit
Ivan Lam, a senior analyst at Counterpoint Research, thinks that Apple’s decline is partly due to the Chinese economy’s slowdown and this affects consumers’ pockets quite a lot.
Chinese domestic brands including Vivo, Honor and Oppo̦ are coming back and outperforming Apple after being crushed by the iPhone 13 late last year.
Overall, a seasonal drop in demand and major economic uncertainty have impacted the Chinese market over the past few months.
Lam emphasized: “I don’t think Q2 data will improve much because of the lockdowns will continue to affect consumers’ willingness to spend”.
According to calculations by CNN, there are at least 27 cities across China under a total blockade and this affects more than 165 million people. Shanghai, China’s major financial hub, has been closed for more than a month. The restrictions have forced many businesses to close and dealt a blow to the nation’s economic prospects.
China’s economy has been slowing down over the past few months. The unemployment rate also rose to a record 6% in 31 major cities.
Mengmeng Zhang, a research analyst with Counterpoint Research said: “These factors, combined with a downward trend in demand have appeared in the market smartphone China before the new wave of the pandemic and its significant impact on the sector.”
She said that China’s smartphone demand remained “low” due to weak consumer sentiment and lack of new innovations to stimulate consumers.
It’s not just weak demand that is hurting Apple in China. The company is also facing supply chain challenges stemming from China’s closure of many major cities.
Foxconn, the main supplier to Apple, stopped production at its factory in Shenzhen for several days last month when the city imposed a blockade order. Pegatron, an iPhone assembler, also had to suspend operations at factories in Shanghai and Kunshan earlier this month.
CEO Tim Cook said the growing restrictions due to the Covid-19 epidemic in China along with chip shortages across the industry will affect the company’s sales next quarter by $4 to $8 billion.
“Supply chain issues continue to be a big deal in China and that will weigh on growth next quarter,” said Dan Ives, analyst at Wedbush Securities.
Earlier this month, Canalys warned that the world’s smartphone makers would face great uncertainty due to the blockades in China, the Russia-Ukraine war and the threat of inflation.
Refer to CNN