Research firm Counterpoint estimates that iPhone sales in China fell 19% year-on-year in the first quarter of 2024, the worst quarterly performance since 2020, and Apple's sales in China are similar to Huawei's overall sales, while China's smartphone market grew by about 1.5% in the first quarter.
To be honest, this was expected, and the reason why it was the worst performance since 2020 was because Huawei phones were forced to temporarily leave the stage due to sanctions imposed by the Trump administration this year, and most of this share was eaten by Apple. To put it bluntly, the biggest direct beneficiary of the United States' targeted suppression of Huawei is Apple.
In the third quarter of 2023, the once-disappeared Huawei mobile phone will reappear and compete with Apple's mobile phone again, which undoubtedly marks the end of Apple's best days in the Chinese market. It should be emphasized that Huawei's ability to make a comeback is of extraordinary significance for China's high-end manufacturing:
You know, Apple is eating up the high-end market share of China's smartphones, and at the same time moving the foundry out of China, which is highly consistent with Trump's intentions.
Huawei withstood the pressure of U.S. sanctions, and is bound to fully replace domestic production as much as possible in smartphone manufacturing, only with full localization, it is not afraid of U.S. sanctions, one negative and one positive, China's high-end smartphone manufacturing industry chain remodeling, turning passive into active, has epoch-making significance.
On the one hand, the United States has spared no effort to de-sinicize the manufacturing industry, and on the other hand, a number of Chinese companies that have been sanctioned by the United States have further improved the localization of high-end manufacturing on the road to survival.
It is true that the United States imposed trade tariffs, which once accelerated the relocation of low-end manufacturing, and while being suppressed, high-end manufacturing took the opportunity to rise. Fortunately, in this global industrial transfer, China has caught up with the wave of industrial intelligence, offsetting the disadvantage of rising labor costs, which makes Chinese manufacturing more comfortable in response to US sanctions.
As far as the U.S. sanctions on Huawei itself are concerned, it is difficult to distinguish whether the benefits outweigh the disadvantages or the disadvantages outweigh the advantages. The United States struck a point and saved a face.
The United States hopes to achieve a long-term technological lead over China, and Chinese companies are backed by a huge market of 1.4 billion people, as long as they can survive tenaciously, despite the short-term technical disadvantages, because the market is large enough, they can get a respite and use the market to win time to catch up, and the suppression will become a bit clumsy.
As far as the facts are concerned, the resurgence of Huawei's mobile phones and the relinquishment of Apple's market share can only show one problem, that is, the dividends of the United States to suppress Chinese companies have ended. The disappearance of dividends means that the benefits outweigh the disadvantages from the early days to the disadvantages outweigh the advantages.
Recently, high-ranking US officials have visited the United States more intensively, but the mentality of the Chinese people has undergone a major change from that of a few years ago, that is, they basically do not have any illusions about the United States.
Even so, the successive visits of Yellen and Blinken in April inevitably made people explore further in related fields.
On December 26, 2023, the Office of the U.S. Trade Representative (USTR) announced that it will further extend the tariff exemption period until May 31, 2024, for certain Chinese imports, including 352 Chinese imports that have been reinstated for tariff exemption and 77 Chinese imports related to COVID-19.
Yellen and Blinken's successive visits to China in April do not rule out the possibility of further discussion on this issue, after all, there is only one month left, and in the economic and trade field, the issue of tariffs and unjustified suppression of Chinese companies must be the focus of discussion.
Judging from Apple's loss of most of China's market share, the disappearance of the suppression dividend means that it will basically not be beneficial to continue to take similar operations, but it will stimulate the accelerated substitution of Chinese manufacturing locally, which is probably unexpected by the Americans.
Summary: If the United States continues to adopt trade sanctions and targeted technological suppression, the effect will become less and less obvious, and it will also bury the opportunity to make money in the Chinese market, and there will be fewer and fewer cards to play, and it has fallen into a dilemma.