Apple iPhone shipments fall 10% as Android rivals surge

(Bloomberg) — Apple Inc’s iPhone shipments fell a better-than-forecast 10% in the March quarter, reflecting falling sales in China despite a broader recovery in the smartphone industry.

Bloomberg’s Most Read

The company sold 50.1 million iPhones in the first three months, according to preliminary numbers from IDC, falling short of the average analyst estimate compiled by Bloomberg of 51.7 million units for the period.

The Cupertino, California-based company has struggled to sustain sales in the world’s biggest smartphone market since the launch of the latest generation iPhone in September. The resurgence of Huawei Technologies Co., increased domestic competition and Beijing’s ban on foreign devices in the workplace weighed on sales.

The drop is especially pronounced in a context in which the global mobile market is recording its best growth in years. Smartphone makers sold 289.4 million devices in the period, a 7.8% increase from the previous year’s low, when many manufacturers faced a glut of unsold devices. Samsung Electronics Co. regained the top spot in the March quarter, while budget-focused brand Transsion increased shipments by 85% and Xiaomi Corp. increased shipments by 85%.

“The smartphone market is emerging from the turbulence of the last two years stronger and changed,” said Nabila Popal, research director at IDC. “Although both major players recorded negative growth in the first quarter, it appears that Samsung is in a stronger overall position than in recent quarters.”

Prominent Apple suppliers Hon Hai Precision Industry Co., Murata Manufacturing Co., LG Innotek Co. and TDK Corp. fell in early trading in Asia on Monday amid a broader sell-off due to fears of an escalation of the conflict in the Middle East.

During the pandemic, Apple’s iPhone showed the most resilience as consumers pulled back on smartphone purchases from most of its Android rivals. This inventory buildup has led to aggressive pricing by Chinese competitors like Xiaomi, which took months to exhaust its excess supply and is now starting to ramp up shipments. Huawei’s surprise return to prominence last year – with its own Chinese-made chip and HarmonyOS operating system in the Mate 60 series – has been undermining Apple’s share of China’s premium market since August.

The story continues

“Increased competition in China is a big part of Apple’s decline in the first quarter,” Popal said. Elsewhere, several regions started the year with excess inventory of iPhones after large shipments in the final months of 2023, she added.

Average selling prices for cell phones are rising as consumers increasingly opt for premium models that they want to keep for longer, IDC researchers have found. Apple, which consistently maintains the highest ASP in the industry, has been leading the way in this regard, with consumers showing a distinct preference for its higher-tier models. Still, the company has resorted to unusual discounts this year to stimulate sales, with some retail partners in China taking up to $180 off the regular price.

In March, Apple opened a new large store in the heart of Shanghai’s financial district, attended by CEO Tim Cook. China is home to the company’s largest retail network outside the US and accounts for about a fifth of sales, which are still driven by the iPhone. However, many of the attendees who spoke to Bloomberg at the store launch in Shanghai purchased their iPhones more than two years ago. And while Apple fans said they intended to stay in the Apple ecosystem, some said they were also considering foldable device options from rivals or Huawei’s Mate 60 successor.

What Bloomberg Intelligence says

–With help from Jessica Sui.

(Updates with stock reactions and comments)

Bloomberg Businessweek Most Read

©2024 Bloomberg LP