The smartphone market in the United States and China is rapidly changing due to the deepening U.S.-China trade conflict. As the Chinese government strengthens its subsidies policy for domestic phone consumption and the trend of patriotic consumption spreads within China, Apple's market share in the Chinese market has plummeted to 5th place. Smartphone manufacturers are diversifying their production locations to countries like India and Vietnam to avoid China's high tariff rates, resulting in the share of imports of Chinese smartphones into the U.S. being halved compared to the previous year.
◇ Apple struggles in China… Production of Chinese iPhones for U.S. export also plummets
According to reports from Bloomberg News and other foreign media on the 31st, Apple will close its direct store, Apple Store, located in Zhongshan District, Dalian, Liaoning Province, China, on the 9th of next month. This is the first time Apple has closed a direct store in China. An IT industry insider analyzed that this is an example of how Apple is struggling in China due to heightened U.S.-China tensions.
In fact, Apple's market share in China has been continuously declining. Until 2023, Apple held the number one position in the Chinese smartphone market, but it dropped to third place in 2024 and recently fell to fifth place. According to market research firm Canalys, Huawei (18%·12.2 million units) took the top spot in China's smartphone market share in the second quarter. This was followed by Vivo (17%·11.8 million units), Oppo (16%·10.7 million units), and Xiaomi (15%·10.4 million units). Apple (15%·10.1 million units) ranked fifth. Among the top five manufacturers, four are Chinese companies, with their combined market share exceeding 65%.
The reason Apple is struggling in the Chinese market is largely due to the intensified U.S.-China conflict, which has increased anti-American sentiment in China and spread patriotic consumption. Additionally, the Chinese government has provided subsidies amounting to 15% of the retail price for smartphones priced below 6,000 yuan (approximately $1150) to boost domestic phone consumption. The blockage of Apple's anticipated 'Apple Intelligence' iPhones (for the Chinese market) by the Chinese government has also hindered progress.
In contrast, the import of Chinese smartphones in the United States is plummeting. The share of Chinese products, which accounted for 61% of all smartphone imports in the second quarter of last year, has sharply decreased to 25% in the second quarter of this year. Instead, the share of smartphones from India has increased from 13% last year to 44% this year, while those from Vietnam have risen from 24% to 30%. Apple has been the driving force behind these changes. Following the Trump administration's announcement of tariffs exceeding 60% on Chinese products, Apple diversified its iPhone supply chain, previously concentrated in China, to include India and Vietnam beginning in the second quarter. Previously, more than 80% of iPhones supplied globally were produced in China, but adjustments to reduce this proportion have become unavoidable.
◇ China accounts for 20% of Apple's revenue... concerns of becoming a victim of U.S.-China conflict
The Chinese market accounts for about 20% of Apple's revenue, making it the largest market after the United States and Europe. Apple CEO Tim Cook's unprecedented visits to China three times last year indicate how important the Chinese market is to Apple.
The problem is that due to the tariff policies of the Trump administration, Apple must diversify its previously China-centric iPhone supply chain. This means that production of iPhones for export to the U.S. from China will have to cease. However, if the Chinese government uses this as an excuse to indirectly or directly initiate 'killing Apple', it could follow in the footsteps of Samsung, which was the number one player in the Chinese smartphone market over a decade ago. Currently, Samsung Electronics' market share in the Chinese smartphone market is only around 1%.
Professor Kim Kyung-won of Sejong University's Department of Business Administration noted, 'As anti-Korean sentiment grew in China due to the THAAD (Terminal High Altitude Area Defense) deployment issue, the Chinese government has previously initiated indirect measures to 'kill Samsung'. He added, 'If the U.S.-China conflict intensifies due to the increasing protectionist tariffs on Chinese products by President Donald Trump, Apple's likelihood of following Samsung's path in China is significant.'