19 Feb

Is Apple Fighting a Losing Battle with Huawei in China?

WRITTEN BY Jitendra Parashar

Apple’s trouble in China

In the previous article, we looked at the recent recovery in Apple (AAPL) stock after a massive fall of over 30% in the quarter that ended in December 2018. During the quarter, the S&P 500 Index (SPY) and the NASDAQ Composite Index (QQQ) fell 14.0% and 17.5%, respectively. Reports suggesting declining iPhone sales in the Chinese market started taking a toll on Apple stock at the beginning of the same period.

On January 3, 2019, Apple’s CEO, Tim Cook, confirmed a decline in iPhone sales in the Chinese market, which triggered a massive sell-off in Apple stock in January, with its stock falling 10% on January 4 alone.

Is Apple Fighting a Losing Battle with Huawei in China?

iPhone shipments fell 20% in China

According to a recent research report by the IDC, Apple’s iPhone sales fell 19.9% YoY (year-over-year) in China in the fourth quarter of 2018. At the same time, Chinese tech giant (FXI) (MCHI) Huawei’s home market smartphone shipments jumped 23.3% YoY. During the quarter, OPPO’s and Vivo’s shipment volumes also rose 1.5% and 3.1%, respectively, in the country. In contrast, Xiaomi’s Chinese shipments fell 34.9% in the quarter that ended in December.

With this, Apple’s iPhone shipments to China fell 11.7% YoY in 2018, whereas Huawei’s shipments to China rose 15.5%. The IDC’s report also highlighted that 2018 was the third consecutive year during which Apple’s iPhone shipments fell in the Chinese market. The report suggested users’ lengthening iPhone replacement cycles as one of the possible reasons for the decline in the iPhone’s Chinese shipments in the last three years.

In the next article, we’ll discuss some other possible reasons why Apple could be losing the battle with its Chinese competitors.

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