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Apple’s China woes could hurt iPhone sales in 2025: analyst
Litter (AAPL) is set to launch its next-generation AI-centric iPhone in September, but the company’s Apple Intelligence software platform may not be enough to trigger a new sales supercycle in 2025. That’s according to UBS Global Research analyst David Vogt, who says Apple’s market share losses in China to domestic companies like Huawei act as a “material damper on iPhone unit growth.”
Apple relies heavily on iPhone sales in China, its third-largest market by total revenue, behind the Americas and Europe. In 2023, China accounted for $72.56 billion of Apple’s $383.3 billion in revenue. The Americas brought in $162.6 billion, while Europe accounted for $94.3 billion.
The resurgence of Huawei, which was initially hampered by U.S. sanctions on high-powered smartphone chips in 2019 but has since released phones with sufficiently advanced chips, has meant increased competition for Apple in China. That, coupled with a tepid economic environment, led to slower iPhone sales in the region earlier this year.
Apple has tried to boost sales to Chinese consumers by offering steep discounts across the Greater China market. And by some measures, it’s working. According to BloombergiPhone shipments increased by as much as 50% in April and 40% in May.
Despite these gains, Huawei could still pose a threat to Apple’s growth in China. To counter this and boost sales in other regions, the company announced its new Apple Intelligence platform during its WWDC event in June. But according to Apple, the software, which infuses generative AI technologies into apps ranging from Messages and Photos to the iPhone’s Calculator app, requires powerful processors found only in the iPhone 15 Pro line and, presumably, future iPhones.
This means that users who want to take advantage of Apple Intelligence but have older iPhones or even the standard iPhone 15 will have to shell out money to use the new software.
Still, Apple isn’t the only company rolling out generative AI technologies. Google (GOOG, GOOGL) and Samsung have already released their own smartphones with generative AI, and you can expect more Android device makers to follow suit.
Samsung is also gearing up for its annual Unpacked event next week, where it’s expected to launch its newest foldable phones, while Google is looking to announce its own updated line of Pixel smartphones in August.
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Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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