While Apple struggles in China, its sales have remained steady in Latin America. However, the iPhone’s decline in China and other key markets highlights the urgency for Apple to accelerate its AI development and secure local partnerships to better compete with Chinese smartphone makers offering AI-driven features.
BY PC Bureau
Apple’s iPhone sales took a hit in 2024, particularly in China, as the tech giant lost ground to rapidly growing Chinese rivals, including Xiaomi, Vivo, and Huawei. According to Counterpoint Research, Apple’s market share dropped to 18% in 2024, a decrease of one percentage point from the previous year. This marks a significant slowdown for the company, especially in its largest market outside of the U.S. At the same time, competitors from China, such as Xiaomi and Vivo, surged ahead with faster growth, making significant strides in the global smartphone market.
Apple’s sales declined by 2% overall in 2024, despite the broader smartphone market seeing a global growth of 4%. This dip in sales signals the challenges Apple is facing in maintaining its dominance in the highly competitive smartphone space, especially in markets where it once held a strong position. In China, where local competitors have been quick to innovate and cater to consumer needs, Apple has seen its iPhone sales struggle.
Apple’s Struggles with Artificial Intelligence and China
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A key factor in Apple’s stagnation in China and other markets is its delayed adoption and integration of Artificial Intelligence (AI) into its devices. While Apple has begun to roll out AI enhancements, including generative AI features for tasks like writing assistance and image generation, these features are not yet available in China. Apple’s cautious approach to AI development and integration, compounded by challenges in securing local partners for these features, has led to a gap in comparison with Chinese smartphone brands, who have already integrated their own AI tools into their devices.
Apple’s iPhone 16 series, launched in September, was met with a mixed reception, partly due to the absence of key AI-powered features at launch. Counterpoint’s director Tarun Pathak pointed out that, “Apple’s iPhone 16 series was met with a mixed response, partly due to a lack of availability of Apple Intelligence at launch.” This lack of innovation in AI, particularly in a market like China, where consumers are increasingly looking for smartphones equipped with AI capabilities, has hurt Apple’s position.
Rising Competition from Chinese Smartphone Manufacturers
The research also highlighted that Chinese smartphone brands are continuing to gain momentum. Lenovo’s Motorola, Huawei, and Honor were among the fastest-growing brands in the top 10, with each of them developing their own AI technologies. These Chinese manufacturers have been aggressively pushing the envelope on AI and are already offering services like AI writing assistants, smart task automation, and personalized image generation. These advancements are setting them apart from Apple, whose AI tools are still in development and have not yet reached the Chinese market.
Chinese smartphone manufacturers have an advantage in their home market, where they can build AI services tailored to the specific needs of Chinese consumers. In contrast, Apple has struggled to secure the necessary partnerships to bring these services to China, further alienating local consumers who are looking for cutting-edge AI features.
Apple’s Performance in Other Markets
Despite the struggles in China, Apple’s performance in non-core markets like Latin America showed stronger growth. While the iPhone faced challenges in its largest markets, Apple continued to perform well in regions outside of North America and China. This highlights the global divide in consumer preferences and the role that AI innovation and pricing play in determining smartphone success.
In Latin America, for instance, Apple’s iPhones remain popular, thanks to brand loyalty and premium positioning in the market. However, the company’s failure to fully embrace AI in its devices has opened the door for competitors in regions like Asia to offer more affordable, feature-rich devices, giving consumers more options.
Looking Ahead
The smartphone market in 2025 will be pivotal for Apple as it looks to regain its momentum. With Chinese manufacturers continuing to push forward in AI, Apple will need to accelerate its development of AI features and work to establish local partnerships in markets like China to stay competitive. If Apple can integrate AI features effectively across its devices, it may be able to recover lost ground and reclaim its share of the global market.
However, as of now, Apple is facing a race against time to catch up with its competitors in a market where AI is becoming increasingly central to consumer choice. If Apple fails to innovate and integrate AI at a pace that matches its rivals, the company risks losing further market share to its Chinese competitors, particularly in key markets like China and India. The challenge will be to offer consumers a compelling, AI-driven experience that justifies the premium price of an iPhone.
In the coming months, all eyes will be on Apple’s strategy for artificial intelligence and its approach to bolstering the iPhone’s competitive edge against an increasingly fierce global market.
