Two research reports published this week showed that Apple (AAPL) has slipped to third place, behind Chinese Android handset brands.
“Smartphone sales in China declined 14% in the first quarter, as volumes fell “close to the levels seen during Q1 2020 affected by the severe pandemic,” Counterpoint Research said in a statement. report on Thursday.
Counterpoint Research said Apple’s (AAPL) sales fell 23% in the three months to March, compared to the previous quarter. The company developed rapidly in China last year, Right after releasing iPhone 13.
Its market share in China now stands at 17.9%, compared to 21.7% in the quarter ended December.
A Canalys report on Friday also showed that Apple has moved back from the market leader in China to third place, with its first-quarter shipments down 36% from the previous quarter. Canalys tracks shipments by manufacturers to retail stores rather than sales to consumers.
Counterpoint Research senior analyst Evan Lam partly attributed Apple’s decline The economic slowdown in China that “has affected the money in people’s pockets.”
Lam said Chinese domestic brands including Vivo, Honor and Oppo outperformed Apple as their sales picked up after suffering the strong performance of the iPhone 13 in the last quarter of 2021.
Overall, the seasonal decline in demand and major economic uncertainty have dragged the market in the first few months of this year.
“I don’t think the Q2 data will improve much, as the ongoing lockdown continues to impact consumers’ willingness to spend,” Lam told CNN Business.
At least 27 cities across China are currently in complete or partial lockdown, affecting 165 million people, according to CNN calculations. Shanghai – the country’s major financial center and a major manufacturing hub – has been closed for more than a month. The restrictions have forced the closure of many businesses and dealt a major blow to economic activity.
China’s economy has slowed sharply in the past few months. Retail sales contracted in March for the first time in more than a year. Meanwhile, unemployment soared to a record 6% in 31 major cities.
Mengmeng Zhang, a research analyst at Counterpoint Research, said in the report accompanying the data release, “These factors, which are already visible in China’s smartphone market before the latest pandemic wave, have significantly impacted the region.” “
He expected China’s smartphone demand to remain “overwhelming” due to weak consumer sentiment and a lack of new innovations to encourage consumers.
It’s not just weak demand that is hurting Apple in China. company The supply chain is also facing challenges stemming from China’s lockdown. Foxconn, a major supplier of Apple, last month halted production at its Shenzhen factory for a few days as the city imposed a Covid lockdown. iPhone assembler Pegatron also shut down operations at its Shanghai and Kunshan plants earlier this month.
CEO Tim Cook said during an earnings call on Thursday that industry-wide silicon shortages, along with growing Covid restrictions in China, will impact the company’s next quarter by $4 billion to $8 billion.
“Supply chain issues remain a headwind in China and will impact June quarter growth,” said Dan Ives, an analyst at Wedbush Securities.
Earlier this month, Canalys warned that smartphone vendors in the world face great uncertainty due to China’s rolling lockdown, the Russia-Ukraine war and the threat of inflation.
—Samantha Murphy Kelly contributed to this report.