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Apple and Samsung Are Facing Threat from Huawei

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Apple’s revenue comes mostly from the iPhone

Apple (AAPL) relies on the iPhone for most of its revenue. In the most recent first quarter of fiscal 2019, which ended December 29, 61.7% of overall revenue came from iPhone sales. However, the iPhone maker is facing headwinds in its core iPhone business, which is evident from a year-over-year decline and lower-than-expected iPhone sales numbers in Q1. iPhone sales of $51.98 billion missed analysts’ expectations of $52.67 billion in Q1 and declined 15% year-over-year, mostly due to weakness in China (MCHI) (FXI).

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Apple and Samsung are losing share in the global smartphone market

According to research firm Gartner, the overall smartphone shipment sales to end users slowed down to 408.4 million units in the fourth quarter ending December, only 0.1% higher YoY from the year-ago quarter. Samsung (SSNLF) and Apple, the top two smartphone players in the global market, are also losing their share, as demand for high-end smartphones is phasing out.

South Korean consumer electronics giant Samsung is the number one smartphone company in the world with a 17.3% market share, followed by Apple, which holds 15.8% in the global smartphone market in the quarter ending in December. However, the market share of Samsung and Apple has declined from 18.2% and 17.9%, respectively, in the year-ago period. Gartner stated that Apple recorded its worst quarterly decline (11.8%) since the first quarter of 2016.

However, China’s smartphone player Huawei is gaining market share to 14.8% in the quarter ending December 2018, up four percentage points from 10.8% in the year-ago period. The market share of OPPO and Xiaomi touched 7.7% and 6.8% in the fourth quarter of 2018 as compared to 6.3% and 6.9%, respectively, in the year-ago period.

Huawei’s rising market share might threaten Apple’s iPhones business, which is not doing well amid soft demand. The US-China trade war might also raise the cost of Apple’s iPhones.

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