Apple’s global iPhone market share dropped to 18% in 2024 in view of rising competition from Chinese brands like Xiaomi and Huawei. Delayed AI features in China contributed to the decline.
In 2024, Apple's global share in the iPhone market dropped to 18% when the technology firm was fighting off fierce Chinese competitors. Apple reportedly faced various challenges regarding rolling out its Apple AI features in China, presently the largest market for smartphones in the world.
Market Performance: A Mixed Bag
According to a report by Counterpoint Research, Apple's iPhone sales declined 2% year-over-year. Meanwhile, the global smartphone market grew by 4%. This was propelled by the increased presence of Chinese players like Xiaomi, Vivo, Huawei, and Honor, which thrived by offering innovative and affordable Android devices. Even Apple's arch-competitor, Samsung Electronics, lost ground to these fast-growing competitors.
Offset against overall sales losses, Apple enjoyed robust growth in its premium segments, with more than half of its sales in China consisting of Pro and Pro Max models. These higher-end models blunted some of the impacts of declining unit sales and reflected the shift to higher-margin products.
Apple AI Challenges: A Missed Opportunity in China
Apple has made slower moves than rivals to put artificial intelligence into consumer products. For instance, the company's iPhone 16 series, which launched in September 2024, came installed with a bunch of AI-powered enhancements, ranging from writing help to the creation of images. None have been rolled out in China amid regulatory hurdles, and so far, Apple failed to secure the necessary partnerships with local providers.
The absence of Apple Intelligence in China has been a significant disadvantage, especially as Chinese rivals rapidly develop their in-house AI tools. Brands like Huawei and Xiaomi have introduced AI-driven features capable of automating tasks, capturing the attention of tech-savvy consumers in the region.
"Apple's iPhone 16 series was met with a mixed response, partly due to a lack of availability of Apple Intelligence at launch," said Tarun Pathak, a director at Counterpoint Research. "However, Apple continued to grow strongly in its non-core markets like Latin America."
Strategic Moves and Future Plans
While Apple AI faced headwinds in China, the company made strides in other arenas:
- Data and AI Expansion: On January 12, 2025, Apple launched a $35 million data-processing subsidiary in Shanghai to enhance its software and big data capabilities, signaling a long-term commitment to the region despite current challenges.
- Manufacturing Growth: In a move to diversify its supply chain, Apple announced plans to build an AirTag factory in Batam, Indonesia, which is expected to meet 65% of global AirTag demand.
- Legal Resolutions: Apple settled a $95 million lawsuit over alleged data misuse by its Siri assistant, though it denied any wrongdoing.
Competitive Landscape and Outlook
In this regard, Motorola, Huawei, and Honor have emerged as the fastest growers in the global smartphone market. Each of them is leveraging its AI ecosystem, trying to win over consumers. These are also emerging as serious challengers, especially in strong markets such as China and Southeast Asia.
Though Apple has lost both market share and unit sales, focusing on premium devices and emerging markets like Latin America has given it the leeway it needs to claw back.
What’s Next for Apple AI?
Apple's performance in 2024 underlines a changed dynamic in the global smartphone universe. Here, the points of survival and success have been fixed at innovation, Apple Intelligence embedment, and regional adaptability. Apple’s success depends on overcoming the challenges of AI and access to China’s market. Closing the gap with rivals by introducing high-end features through Apple AI is the key.
