For the first time in six years, Apple became the leading smartphone brand in China three months ago. It has now fallen behind its Kannada competitors, who have hit harder than others by dropping sales in the first quarter. Apple has slipped to third place, after Android makers, according to two survey reports released this week. Changes in market conditions occur as China experiences a dramatic economic downturn and as Covid’s policies become consumer spending.
Smartphone sales in China declined 14% in the first quarter, as rates fell “near the levels seen during the severe pandemic of Q1 2020,” Counterpoint Research said in a report on Thursday. Apple sales fell 23% in the three months to March, compared with the previous quarter, Counterpoint Research added. The company enjoyed rapid growth in China last year, shortly after the release of the iPhone 13.
Its market share in China now stands at 17.9%, compared with 21.7% in the quarter ended December. A report by Canalys on Friday also showed Apple falling back from market share in China to third place, with its first quarter moving down 36% from the previous quarter. Canalys tracked shipments by manufacturers to retail stores, rather than sales to customers. Ivan Lam, senior analyst at Counterpoint Research, said Apple’s decline was partly due to the economic slowdown in China that “has affected money in people’s pockets.”
Chinese brands – including Vivo, Honor and Oppo̦ – are better than Apple as their sales rebound after suffering an iPhone 13 power outage in the last quarter of 2021, Lam adds. Overall, time constraints in demand and major economic uncertainty have hit the market in the first few months of this year. “I don’t think Q2 data will improve much, as ongoing locks will continue to affect consumers’ desire to spend,” Lam told CNN Business.
Full or partial locks are currently available in at least 27 cities across China, affecting up to 165 million people, according to CNN estimates. Shanghai – a national financial system and a major manufacturing hub – has been under lockdown for more than a month. The restrictions have forced many businesses to shut down and cause serious damage to the economy. China’s trade has slowed sharply in the past two months. Retail sales contracted in March for the first time in more than a year. Unemployment, meanwhile, increased by 6% in 31 major cities.
“These factors, combined with the low demand trend that already appears in China’s smartphone market ahead of the new pandemic, are having a significant impact on the sector,” Mengmeng Zhang, a research analyst for Counterpoint Research, said in a statement. followed by the data release. He expects China’s phone demand to be “indifferent” due to weak consumer sentiment and lack of new innovations to engage customers.
It is not the only weak question that is hurting Apple in China. The company is also facing supply chain challenges emerging from China locks. Foxconn, a major supplier for Apple, stopped production at its Shenzhen facility for a few days last month as the city ordered a Covid lock. Pegatron, an iPhone conference, also suspended operations in Shanghai and the Kunshan plant earlier this month.
CEO Tim Cook said Thursday during a asset call that growing Covid tariffs in China, including mineral shortages across the industry, will affect the industry’s quarterly revenue by $ 4 billion to $ 8 billion . “The supply chain issues continue to be hairy in China and will weigh on the June quarter growth,” said Dan Ives, analyst with Wedbush Securities. Earlier this month, Canalys warned that smartphone retailers around the world face greater uncertainty due to the locking up of China, the Russia-Ukraine war, and additional threats.