Apple is seeing one of its sharpest declines in China. In March, shipments of foreign-branded smartphones, including iPhones, fell by nearly 50% compared to a year earlier, dropping from 3.7 million units to just under 1.9 million, according to the China Academy of Information and Communications Technology (CAICT).
Apple’s share of that drop stands out, as the company continues to struggle for momentum in a market where local competitors now dominate key price points.
This decline follows a broader trend. Apple reported an 11% year-over-year revenue drop in Greater China in Q1 2025, after a 13% drop in the same quarter last year. It’s managed to stay in the green in only three of its last twelve quarters in the region.
Government Subsidies Shift the Market
The Chinese government’s national smartphone subsidy program, launched in January, appears to be a major factor in Apple’s slump. The initiative supports smartphones priced below CNY 6,000 (around $820), a range that excludes most of Apple’s current lineup but covers nearly all of the domestic brands’ models.
According to Counterpoint Research, the subsidy helped lift China’s smartphone sales by 2.5% in Q1 2025. Huawei, which leads the market, saw a 28.5% jump in year-over-year sales. Other local brands like Xiaomi, vivo, and OPPO also gained share by pushing competitively priced models that meet the subsidy threshold.
Apple Slips as Huawei Gains Ground
Huawei now leads the Chinese smartphone market, reclaiming its strongest position since 2021. In Q1 2025, it captured a 19.4% share and saw a 28.5% year-on-year sales increase, according to Counterpoint. The rise is driven by strong demand for its Nova 13 and premium Pura 70 series. Huawei also dominates the $600–$799 segment, the territory where Apple once had a solid foothold.
The subsidy program worked in Huawei’s favor, with aggressive pricing and promotions making its flagship models more accessible. The brand also capitalized on local sentiment and its expanding AI capabilities, quickly integrating GenAI features that appeal to domestic users.
Apple, in contrast, has seen its sales contract as its mainline and Pro models remain priced above the subsidy threshold. It ranked fifth in market share, behind OPPO, which gained ground with its A and Reno series. With nearly half the smartphones sold in Q1 being GenAI-enabled, local brands continue to pull ahead by offering competitive specs, aggressive pricing, and faster innovation.
Unless Apple adjusts its pricing strategy or tailors more of its lineup to local preferences, the gap between it and leaders like Huawei will likely widen.