(Bloomberg) — Apple Inc . ’s iPhone shipments fell more than 10% in the March quarter, reflecting flagging sales in China despite a broader smartphone sector recovery.
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According to preliminary figures from ITC, the company shipped 50.1 million iPhones in the first three months, falling short of the average analyst estimate compiled by Bloomberg of 51.7 million units for the period.
The Cupertino, California-based company has struggled to maintain sales in the world's largest smartphone market since its latest iPhone generation debuted in September. Huawei Technologies Co. The resurgence of , greater domestic competition and Beijing's ban on foreign devices in the workplace have weighed on sales.
The decline is particularly pronounced against the backdrop of the overall mobile market registering its best growth in years. Smartphone makers shipped 289.4 million handsets during the period, marking a 7.8% jump from the year-ago trough, as many manufacturers struggled with unsold devices. In the March quarter, Samsung Electronics Co. regained the top spot, while budget-focused brand Transsion increased shipments by 85% and Xiaomi Corp. surged back to close the gap on second-placed Apple.
“The smartphone market is robust and transitioning from the turmoil of the past two years,” said Nabila Bhopal, director of research at IDC. “Although the top two players both saw negative growth in the first quarter, Samsung appears to be in a stronger position overall than they have been in recent quarters.”
Notable Apple suppliers include Hon Hai Precision Industry Co., Murata Manufacturing Co., LG Innotek Co. and TDK Corp. Asian trade fell early on Monday, amid a broader sell-off on fears of escalating conflicts in the Middle East.
During the pandemic, Apple's iPhone showed a huge backlash as customers shied away from buying smartphones from its Android-powered rivals. That inventory build-up led to aggressive pricing by Chinese rivals like Xiaomi, which took months to exhaust their oversupply and are now starting to ramp up shipments again. With its own Chinese-made chip and HarmonyOS operating system in the Mate 60 series — Huawei returned to prominence last year — it has been eroding Apple's share of China's premium market since August.
“Increased competition in China was a big part of Apple's decline in Q1,” Popal said. Elsewhere, several regions started the year with excess iPhone inventories after higher shipments in the final months of 2023, he added.
Average selling prices for handsets are rising as consumers opt for premium models they want to hold longer, IDC's researchers found. Apple, which continues to maintain the highest ASP in the industry, has led to this, with consumers showing a distinct preference for its high-end models. However, the company has resorted to extraordinary discounts to spur sales this year, with some retail partners in China taking up to $180 off the regular price.
In March, Apple opened a massive new store in the financial hub of Shanghai, with CEO Tim Cook in attendance. China hosts the company's largest retail network outside the U.S. and accounts for about a fifth of its sales, which are still driven by the iPhone. Many of the attendees who spoke to Bloomberg at the Shanghai store launch had bought their iPhones two years ago. While those Apple fans said they wanted to stay within the Apple ecosystem, some said they were also considering foldable device options from competitors or Huawei's Mate 60 successor.
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–With help from Jessica Sue.
(Updates with stock reactions and commentary)
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