Apple Inc (NASDAQ:AAPL, ETR:APC) shares suffered another blow on Tuesday, opening 2.2% lower after Counterpoint Research flagged a worrying decline in iPhone demand in China.
Apple’s smartphone struggled during the first six weeks of the year due to resurgent competition from domestic competitor Huawei, with sales down 24%, said researchers.
Huawei shocked the international technology community last September when a breakdown of its flagship Mate 60 handset unveiled a technology stack significantly more advanced than expected.
The Mate 60’s launch marked a “significant milestone for the company after being cut off from critical supply due to US sanctions in 2019”, wrote Bank of America analysts at the time.
“Primarily, (Apple) faced stiff competition at the high end from a resurgent Huawei while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi,” Counterpoint's senior analyst Mengmeng Zhang stated today.
“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now,” added Zhang.
China’s smartphone market is flailing in general, with Counterpoint’s data showing a 7% year-on-year decline in the first six weeks of 2024, though this was against an abnormally high period in 2023 due to deferred sales from the proof year because of production bottlenecks.
“Underperformance of key vendors OPPO and vivo also kept overall growth in the red,” said Counterpoint.
Apple shares have underperformed its Magnificent Seven counterparts. Year to date, the Cupertino mega-cap is down 8%, causing Silicon Valley arch-rival Microsoft Corporation to succeed it as the world’s most valuable company.
Compounding investors’ fears, Apple was recently slapped with a hefty €1.8 billion antitrust fine in the European Union about its App Store practices.