Although Apple has "blossomed" in almost the global market in the fourth quarter of 2023, including setting new records for iPhone revenue share in the United States, India and emerging markets, it is facing increasingly severe challenges in the Chinese market.
A number of industry research institutions have pointed out that the decline in Apple's mobile phone sales in the Chinese market is mainly due to the strong challenge brought by the return of Huawei's mobile phones, and the impact of other Chinese mobile phone brands on the high-end market to launch new models. At the same time, Apple's lack of foldable devices is also an important factor.
It is not difficult to see that 2023 is the year of survival to full recovery, and the sales performance of smartphones is crucial. At present, with the launch of Mate60 and Nova12 series mobile phones, Huawei terminals are seeking a more comprehensive market return. In 2024, Huawei's P70 series, Mate70 series, small folding screens, and "tri-fold machines" are expected to inject strong momentum into Huawei's terminal growth. This will further promote the development, competition and innovation of China's high-end smartphones.
Apple's Greater China region is facing serious challenges
A few days ago, Apple released its financial report for the first quarter of fiscal year 2024 (fourth quarter of 2023), with revenue of $119.6 billion during the reporting period, a year-on-year increase of 2%; Net profit was 339$1.6 billion, up 13% year-over-year. Among them, Apple's revenue in Greater China in the first fiscal quarter was $20.8 billion, a year-on-year decrease of 13%, far below Wall Street's expectations of $23.5 billion.
In specific business segments, iPhone is still Apple's largest revenue**, with revenue of $69.7 billion in the first fiscal quarter, a year-on-year increase of nearly 6%, accounting for 583%。In other businesses, MAC segment revenue was $7.7 billion, up 06%；iPad business revenue of 70US$200 million, down 25% year-on-year; Sales of Wearables, Home & Accessories were 119$500 million, down 11% year-on-year. In addition, Apple's services segment revenue was $23.1 billion, an increase of 11% year-on-year.
There are multiple signs that Apple is facing increasing challenges in the Chinese market, especially in the smartphone space.
According to the latest statistics from research institute TechInsights, in the fourth quarter of 2023, Apple shipped about 14 million units in the Chinese market, with 19The market share of 7% ranked first, but the decline reached 146%。In addition, Glory is in second place with a share of 170%；Vivo third, share 162%；Huawei's shipments almost doubled year-on-year to 11.1 million units, with 15The 6% share ranked fourth. OPPO (including OnePlus) fell to fifth place, followed by Xiaomi in sixth place.
Jefferies analysts believe that "Apple's decline in sales is mainly due to fierce competition from local Chinese brands, especially Huawei, which has returned to the high-end market after releasing the Mate 60 series last year." ”
According to a report released by market research agency Counterpoint Research, Huawei made a strong return to the Chinese market in the first two weeks of 2024 as the No. 1 smartphone sales position. Huawei's share of sales has been declining since the imposition of U.S. sanctions in 2019, and this summit marks the first time it has regained the top spot.
According to the report, Huawei's Mate 60 series powered by its self-developed Kirin 9000S chip is a key driver of Huawei's recent success. In addition, it was supported by its strong brand loyalty and the successful launch of the HarmonyOS operating system. Despite Huawei's strong comeback, the market remains fierce, with Chinese brands such as Xiaomi, OPPO and vivo also launching new models in the high-end market, challenging international giants such as Apple and Samsung.
At the same time, the latest research reports of a number of ** investment banks are also pessimistic about the future sales performance of iPhones. Among them, Ming-Chi Kuo, an analyst at Tianfeng**, said, "Apple has lowered the 2024 iPhone shipment estimate of key upstream semiconductor components to 200 million units (a year-on-year decline of 15%)." Among the world's major mobile phone brands in 2024, Apple is likely to decline the most. ”
According to investment bank Jefferies analysts said in a report, iPhone sales were still down 30% in the first week of the new year from a year earlier, despite the sharp price cuts of many iPhone models, including the iPhone 15 Pro and Pro Max, on major Chinese e-commerce platforms. This decline is significantly faster than Apple's overall 3% decline in China in 2023.
Subsequently, Apple launched a rare large-scale price reduction campaign on the official website of Chinese mainland, among which the iPhone 15 series can be called a "diving" price reduction. Ivan Lam, a senior analyst at Counterpoint Research, said it will be interesting to see whether Apple will adopt an aggressive pricing strategy in the coming weeks on the eve of the Chinese New Year and whether it will lead to an increase in sales.
"In the Chinese market, Apple's weekly shipments have declined by 30% to 40% year-on-year in the past few weeks, and this decline will continue, mainly because of the return of Huawei and the fact that folding phones are gradually becoming the first choice for high-end users in the Chinese market," Kuo said. ”
IDC analyst Nabila Popal has a similar view. "In China, Apple faces more competitive challenges, not only for Huawei, but also because of foldable phones, which is a very popular and fast-growing segment in China," he said. But as we all know, Apple doesn't have foldable devices. ”
It is worth mentioning that by region, Apple's regional markets in the first fiscal quarter increased year-on-year except for Greater China. Among them, Apple's largest market, the Americas, generated revenue of 504 in the first fiscal quarter300 million US dollars, a year-on-year increase of 23%；The revenue of Europe, the second largest market, was US$30.4 billion, up 9. year-on-year8%；The Japanese income was 77US$700 million, an increase of 15% year-on-year; Other Asia-Pacific revenue was 101600 million US dollars, an increase of 66%。
Jeff Fieldhack, director of research at Counterpoint Research, said that while the U.S. is Apple's largest growing market, emerging markets such as India, the Caribbean and Latin America (CALA) and the Middle East and Africa (MEA) have also posted double-digit growth, contributing significantly to its growth. "This growth offsets any challenges Apple may face in China as a result of Huawei's recovery. ”
Huawei's mobile phone business underpinned Huawei's strong growth
For Huawei, 2023 will be the year of a transition from survival to full recovery. While the carrier's business is stable and the digital energy and cloud business is growing rapidly, the terminal business, which was previously known as Huawei's cash cow, is also obvious. With the launch of the Mate60 and Nova 12 series mobile phones, Huawei terminals are seeking a more comprehensive market return.
In his 2024 New Year's speech, Ken Hu, Huawei's rotating chairman, said that after several years of hard work, Huawei has withstood severe tests and the company's operations have basically returned to normal. It is expected to achieve sales revenue of more than 700 billion yuan in 2023. According to this calculation, Huawei's revenue in 2023 will increase by at least 9% year-on-year, which is also the first time since 2021 that its annual revenue will return to 700 billion yuan.
In addition, according to Huawei's previously released business performance briefing for the first three quarters of 2023, the revenue during the reporting period was 456.6 billion yuan, a year-on-year increase of 24%。In the first quarter of 2023, Huawei's revenue was 132.1 billion yuan, the second quarter was 178.8 billion yuan, and the third quarter was 145.7 billion yuan. If Huawei's annual revenue in 2023 exceeds 700 billion yuan, the revenue in the fourth quarter will be at least 243.4 billion yuan, which is expected to increase by 23.5 billion yuan from 196.5 billion yuan in the same period last year9% and 67% month-on-month.
A number of industry insiders pointed out that the return of Huawei's mobile phones may be one of the main reasons for Huawei's significant increase in sales revenue in the fourth quarter. It is reported that since August 2023, Huawei has "sold 30 million Mate 60 phones" worldwide. Based on this, the market research agency BCI announced the third week of 2024 W3 (115-1.21) Smartphone activations in the Chinese market, Huawei and Apple ranked 17A share of 9% tied for first place. In the previous two weeks, Huawei also ranked first.
Lucas Zhong, Research Analyst at Canalys, said: "The Mate 60 Pro has become the leading model to drive Huawei's shipment recovery with innovative features such as the Kirin chip and satellite calling. In addition, from January 2024, Huawei will extend the Kirin chip to the nova series, which will also help drive more demand in the mid-range market in the future. ”
In addition, there are industry sources that in the first half of 2024, Huawei P70 series, small folding screen and other mobile phones will be released one after another, and at the same time, Kirin 5G will basically return, covering P series, Nova series and other mid-to-high-end product lines. In addition, it is rumored that Huawei has been working with the best business to develop a "three-fold" mobile phone since last year, allowing users to have a high-end smartphone and tablet use through new products, and the product has entered the final design stage, ready to enter mass production, and is expected to be listed in the second quarter at the earliest.
Immediately afterwards, Huawei also plans to launch the Mate 70 series of mobile phones in September this year, mainly including four versions, namely Huawei Mate70SE, Huawei Mate70, Huawei Mate70 Pro and Huawei Mate70 RS, which will use the latest iteration of the Kirin flagship chip, 5Cutting-edge technologies such as 5G communication technology and native HarmonyOS to compete directly with Apple's iPhone 16 series phones in markets such as China.
At the same time, Huawei clearly has its "return" goal. According to Ming-Chi Kuo, Huawei's mobile phone shipments are expected to reach 60 million units in 2024, becoming the fastest-growing mobile phone brand in the industry, and it is expected to "double" its shipments compared with 2023. According to a number of first-chain managers and analysts, since entering 2024, Huawei has been increasing the inventory of lenses, cameras, printed circuit boards and other components to achieve relevant goals.
It is worth noting that the rapid development of Huawei's mobile phones** has also promoted the development of high-end smartphones in China. In 2023, China's high-end smartphone market grew by 27%, Counterpoint Research said. Apple maintained its market leadership with its strong performance in the first half of 2023, but from the third quarter of 2023, Apple's market share began to be eaten away by Huawei and other Chinese brands. It is expected that Chinese brands will continue to make efforts in the high-end market in the future.
As a result, Apple is likely to continue to face pressure in the Chinese market. As analysts at investment bank Jefferies**, Apple's shipments to China will see a double-digit percentage decline in 2024. The competition of Chinese mobile phone manufacturers will continue to increase.
With the improvement of channel profits and the stimulation of new products with strong competitiveness of manufacturers, China's smartphone market is expected to enter the track of moderate recovery. With the increase of the middle-class population in the Chinese mainland market in the next 10 years, the huge high-end market is still a long-term strategic competition place for major domestic and foreign manufacturers. Liu Yixuan, research manager of Canalys, said that Huawei's re-entry into the battlefield will also make the market competition tend to be white-hot, further intensifying market innovation.
However, it is not without its challenges for Huawei to regain the high-end market from Apple. IDC said in the report that although it no longer has obvious advantages over the Android flagship iPhone, the overall comprehensive product strength of the iPhone is still one of the best. Liu Yixuan pointed out that as the pressure brought by Huawei's return gradually dips into the mass market, maintaining cooperation with channels will also become an important strategy for the rest of the manufacturers to defend their market share.