Apple's iPhone Sales Stumble as AI Lag Hurts China Market Share

Apple Inc. experienced a 5% decline in global iPhone sales during the last quarter of 2024, losing ground to Chinese rivals, according to Bloomberg. This slowdown coincides with the absence of Apple's AI features in China, its largest market outside the US.

For the full year, Apple saw a 2% sales decline, contrasting with a 4% global market growth. This contrasts sharply with the AI-driven growth of Chinese smartphone makers like Xiaomi and Vivo, which gained market share from both Apple and Samsung.

"Apple's iPhone 16 series was met with a mixed response, partly due to a lack of availability of Apple Intelligence at launch," said Counterpoint director Tarun Pathak, as quoted by Bloomberg. However, the report highlights that Apple saw strong growth in non-core markets like Latin America.

Apple's AI features, collectively known as Apple Intelligence, are being rolled out in stages following the iPhone 16's launch. However, these features are not yet available in China due to the company's ongoing efforts to secure local partners for AI-related services such as writing assistance and image generation.

While Apple sold fewer units in China, it witnessed a higher proportion of sales coming from its pricier Pro and Pro Max models, which accounted for over half of all sales in the country. The report also highlights the rapid growth of Chinese brands like Lenovo's Motorola, Huawei, and Honor, all developing their own in-house AI tools.

Despite the mixed results, Apple's dominance in certain segments remains strong. "Apple is still the top player in the US, Japan, and Western Europe, but is facing challenges in the emerging markets," notes Pathak. "The company is now focused on bringing AI to the masses, which could be a game-changer for its sales."