- Apple’s China problems are getting bigger.
- Domestic chipmakers are formulating plans to supply advanced chips to smartphone makers such as Huawei.
- It’s a move that could help Chinese smartphone makers create more iPhone competitors.
Apple is about to face another big problem in China.
Huawei, one of the region’s biggest competitors, is making major technological advances to help its phones compete with the iPhone.
Chinese smartphone makers have struggled in recent years to obtain high-end semiconductors, a key component of smartphones.
This is because strict U.S. export controls have prevented Western semiconductor manufacturers from shipping their best technology to China.
Naturally, this has been a boon for Apple, which became the region’s best-selling smartphone brand for the first time last year.
However, Apple’s technological superiority may not last long.
This is thanks to plans being drawn up by Chinese chipmakers, including the state-backed SMIC, to build chip production lines in Shanghai and supply cutting-edge processors to domestic smartphone makers like Huawei from their own backyards. That’s what it means. The Financial Times reported this, citing two people familiar with the matter.
This development, which provides domestic brands with domestically produced chips, could cause the biggest problems. The iPhone threat in China still remains.
Apple’s competition intensifies in China
Apple has faced an even tougher situation in China in recent months. Worldwide, the iPhone maker reported that in the final quarter of 2023, revenue would increase by 2% and sales would reach $119.6 billion.
However, in the midst of these sales, there was a significant slowdown in China. Apple reported a 13% decline in revenue in the Greater China region.
This period lasted immediately after the release of. iPhone15, the latest generation smartphone from Cupertino. But the slowdown in sales shows it’s finding it harder to win over Chinese consumers.
Part of the reason is that Chinese consumer appetite has taken a big hit since the coronavirus pandemic. In fact, demand is so weak that China’s consumer price index fell for the third consecutive month in December.
But Apple’s sales decline also reflects a renewed interest in domestically produced devices.
Huawei releases Mate 60 Pro in August The extent of that interest was demonstrated as Chinese consumers snapped up cellphones equipped with tiny Chinese-made 7-nanometer chips that impressed consumers with their speed.
Last year, Apple faced a decline in sales, just as Huawei posted a 36% increase in the final quarter of the year, although it ended 2023 as the best-selling smartphone in China.
If China’s chip plan is successful, this trend could become even more apparent.
FT reported that SMIC may be considering producing a 5-nanometer chip, which is even more advanced than the Huawei Mate 60 Pro’s 7-nanometer chip. As local chips improve in performance, other local rivals such as Honor and OPPO may also want to enter.
Apple CEO Tim Cook, of course, was well aware of the growing threat. Last year, the Apple CEO visited the country twice. A surprise visit in October While sales are struggling.
I may need to make a few more soon.