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On March 20, Apple CEO Tim Cook appeared in Shanghai. In an interview with the media in Shanghai, he said, "For Apple's supply chain, I don't think there is anything more important than China, so in fact, in the past 30 years, we have been expanding our supply chain in China, and we are constantly increasing investment, and the current level of factory modernization is very high, but I think if you look at it in 10 years, looking back, you may not feel how high the level of modernization is today, because we will continue to progress."
According to the analysis of industry insiders, Cook's visit to China this time may have a deep meaning. In the fiercely competitive Chinese mobile phone market, Apple's market leader can't keep it. Not long ago, a report showed that iPhone sales in the Chinese market fell by 24% in the first six weeks of 2024, causing Apple's market share to drop to fourth place in the world's largest smartphone market. Apple's share price has been declining since the beginning of the year, falling 11.53% in more than two months. In the current market environment, Apple has been forced to adopt a drastic price reduction strategy and significantly adjust the price of the iPhone 15 series.
Ming-Chi Kuo, a well-known Apple analyst at Tianfeng International Securities, said that according to the latest supply chain survey, Apple has lowered the estimate of key upstream semiconductor components, and it is expected that iPhone shipments will drop to about 200 million units in 2024, a year-on-year decrease of 15%. Among the world's major mobile phone brands this year, Apple may have experienced the biggest decline. Kuo warned that if Apple fails to launch generative AI services this year that are better than market expectations, Nvidia's market capitalization is likely to surpass Apple's.
In order to meet the challenges of the Chinese market, Apple is also increasing its investment in the Chinese market. On March 12, Apple announced an investment of more than 1 billion yuan to expand its applied research laboratories in China to support the manufacturing of its products.
- The Apple brand is one of the major players in China's smartphone market
In the third quarter of 2022, the pattern of major players in China's smartphone market was relatively stable, with the top five brands including vivo, honor, OPPO, Apple, and Xiaomi. Among them, vivo (including iQOO) is firmly in first place with a market share of 19.9%, OPPO (including OnePlus) is in second place with an 18% share, and Honor is in third place with a share of 17.2%.
——Smartphone sales channel layout: Apple's offline channels are better, and Huawei's online channels are more dominant
Apple's offline sales channels are divided into three categories: independent distributors, large-scale retailers and general retailers, and the three types of sales channels ensure that Apple's products are all over the country, while Huawei's offline sales mainly rely on its own offline stores, and Apple is slightly better in offline sales channels. At the level of online sales channels, Apple only needs to focus on cooperating with merchants on the platform to lay out its own Apple products, but the official flagship store is only set up by JD.com. Huawei's online layout follows the principle of "multi-point flowering", with flagship stores on each platform and its own online mall outside the official website, so Huawei has a slight advantage in terms of online channel layout.
With the accelerated development of large AI models, smartphones are embracing this new opportunity. Canalys, a market research firm, predicts that by 2024, about 5% of global smartphone shipments will be equipped with end-of-device AI computing capabilities. IDC believes that by 2024, global shipments of new-generation AI mobile phones will reach 170 million units, accounting for 15% of overall smartphone shipments. The share of AI handsets in the Chinese market will also grow rapidly, and is expected to exceed 50% by 2027.
IDC recently released a market research report that predicts that global smartphone shipments will reach 1.2 billion units by 2024, a year-on-year increase of 2.8%. Growth will then remain in the low single-digit range through 2028. IDC believes that although overall shipments in 2024 are still below pre-pandemic levels, the global smartphone market has begun to show a recovery upward trend. IDC notes that two key factors driving the overall market recovery are equipment refresh cycles and the growth of emerging market demand.
Bai Ming, a member of the Academic Degrees Committee of the Research Institute of the Ministry of Commerce, said that the competitive advantage of China's smartphones in the international market is mainly reflected in the high cost performance, functional design that meets local needs, communication infrastructure cooperation, mature industrial chain and high frequency of product updates. These advantages make Chinese smartphones have strong market competitiveness in Southeast Asia, Latin America, Africa and other regions.
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