Huawei reclaims top spot in China's smartphone market

Huawei Technologies climbed back to the No 1 spot in China’s smartphone market in the initial two weeks of this year, according to a report by research firm Counterpoint, putting more pressure on 2023 industry leader Apple and major domestic rivals in the world’s largest handset market. This marks the first time Huawei reclaimed the top smartphone sales ranking in China since the U.S. imposed sanctions on the Shenzhen-based company when it was added to the U.S. trade blacklist in May 2019, which crippled the firm’s once-lucrative handset business. The resurgence was jump-started by Huawei’s surprise release last August of its Mate 60 Pro 5G smartphone – powered by the advanced Kirin 9000S processor, which was locally developed in spite of U.S. tech sanctions – as well as the firm’s Android replacement mobile platform HarmonyOS, the Counterpoint report said. It also pointed out that brand loyalty among Chinese consumers greatly contributed to the popularity of Huawei’s new 5G handsets. Huawei however still faced cutthroat competition against Apple and major domestic handset vendors that include Xiaomi, Oppo and Vivo, which continue to launch high-end smartphone models. Robust domestic demand for Huawei’s new 5G smartphone models, years after the release of the Mate 40 series in October 2020, reflect improved consumer appetite for handset upgrades.

China’s smartphone industry showed signs of recovery in 2023, when shipments grew 6.5% year-on-year to 289 million units, according to the China Academy of Information and Communications Technology. Domestic brands made up 231 million units, or around 80%, of total shipments. China’s high-end handset segment sales also grew 37% last year, despite overall weakness in the global smartphone industry, Counterpoint data showed. While Apple led that market segment in the country in the first half of last year, the iPhone maker’s sales started to get squeezed in the third quarter amid a strong push by Chinese vendors led by Huawei. The rise of Huawei smartphone sales in China early this year, followed a decline in iPhone sales in the fourth quarter. Apple, however, still ranked as China’s leading smartphone vendor in the fourth quarter and the whole of last year, according to a report by tech research firm IDC. Apple reported a nearly 13% drop in revenue from its Greater China region – covering the mainland, Hong Kong, Macao and Taiwan – in the December quarter.

Apple’s weekly smartphone shipments in China have declined by 30% to 40% in recent weeks, according to a recent research note by Kuo Ming-chi, a TF International Securities Analyst known for his accurate assessment of Apple’s business. Kuo expected this downward trend to continue this year. “The main reason for the decline is the return of Huawei and the fact that foldable phones have gradually become the first choice for high-end users in the Chinese market,” Kuo wrote in the note. In a rare move, Apple last month offered Chinese consumers discounts of up to CNY800 on a range of products, from iPhones to MacBooks, ahead of the Lunar New Year to fend off competition from Xiaomi and Honor, which also cut their handset prices. Huawei, however, did not pursue a similar strategy, as it faced a supply shortage of its Mate 60 Pro owing to production constraints, the South China Morning Post reports.