Apple Inc. (AAPL, Financial) experienced a significant decline in iPhone sales in China this October, with foreign-branded smartphones, including the iPhone, recording a 44.25% year-on-year drop. Data from the China Academy of Information and Communications Technology (CAICT) revealed that overall imports of foreign-manufactured smartphones fell to 6.22 million units, compared to 11.15 million in October 2023.
Apple's iPhone 16 series, released in September, did decent sales worldwide. Still, it underperformed in China since the unveiling of its AI capability specifically for the Chinese market was done later. While the platform's popularity benefited from certain features, the absence of a local AI partner diminished its appeal. Beijing recently tightened regulations regarding foreign-developed AI models and now requires them to partner with Chinese companies like Baidu.
Nonetheless, the cumulative sales of cellular phones in China rose 1.8% during October, reaching 29.67 million units, showing that domestic consumers crave locally manufactured mobile phones. This transition also points to a stronger branding of indigenous competitors in the world's biggest smartphone market.
Apple really feels the heat in the Chinese market due to increasing competition and changing customer trends, which is quite a test of Apple's market position in China. Whether Apple is capable of regaining the lost ground in this essential market depends on the performance of its AI-dedicated features in 2025 and cooperation with local parties.
