Apple has experienced a significant turnaround in the Chinese market, marking its first quarterly growth in iPhone sales in two years. This resurgence follows a period of declining performance attributed to escalating U.S.–China trade tensions and increased competition from domestic smartphone manufacturers.
Background:
Since the third quarter of 2022, Apple faced consistent year-over-year revenue declines in China, with some quarters witnessing drops as steep as 13%. The intensifying trade disputes between the United States and China, coupled with the Chinese government’s incentives favoring local brands, further eroded Apple’s market share. Notably, in the first quarter of 2025, Apple was the only major smartphone maker to report a decline in shipments within the region.
Strategic Adjustments:
In response to these challenges, Apple implemented several strategic measures to regain its foothold in the Chinese market:
1. Price Adjustments: In May 2025, Apple reduced iPhone prices, a move that coincided with the annual 618 shopping festival in June. This timing proved advantageous, as the festival is renowned for substantial consumer discounts.
2. Participation in Subsidy Programs: Apple aligned with the Chinese government’s subsidy initiatives, making its products more financially accessible to consumers.
3. Enhanced Product Offerings: The introduction of the iPhone 16e, a more affordable model equipped with the latest A18 chip and Apple Intelligence features, aimed to attract price-sensitive customers.
Market Response:
These initiatives yielded positive results. According to Counterpoint Research, Apple experienced an 8% increase in iPhone sales in the quarter ending June 2025, marking the first growth in this segment in two years. Ethan Qi, Associate Director at Counterpoint, noted that Apple’s timely price adjustments ahead of the 618 shopping festival were well-received by consumers.
Financial Performance:
Apple’s fiscal first-quarter results for 2025 reflected this upward trend. The company reported a 4% year-over-year increase in revenue, totaling $124.3 billion. While iPhone revenue saw a slight decline of 0.8% to $69.14 billion, the overall performance was bolstered by a 14% growth in the Services segment, which reached a new high of $26.34 billion. CEO Tim Cook highlighted that iPhone sales were stronger in markets where Apple Intelligence was available, underscoring the importance of AI integration in driving demand.
Challenges and Outlook:
Despite the recent gains, Apple continues to navigate challenges in the Chinese market. The company faces stiff competition from local brands like Huawei and Xiaomi, which have introduced AI-driven features and benefit from government subsidies. Additionally, potential U.S. tariffs on electronics could impose significant costs, prompting Apple to diversify its manufacturing base to countries like India and Vietnam.
Looking ahead, Apple plans to expand the availability of Apple Intelligence to more languages and regions, including a version in simplified Chinese expected in April. This expansion aims to enhance user experience and drive further adoption in key markets.
Conclusion:
Apple’s recent strategies have effectively reversed a two-year decline in iPhone sales within China. By adjusting pricing, participating in local subsidy programs, and introducing AI-enhanced products, the company has regained momentum in a highly competitive market. However, ongoing challenges necessitate continued innovation and strategic agility to sustain this growth trajectory.
