Apple Faces Global iPhone Sales Decline Amid Rising Competition and AI Lag

Apple Inc.’s global iPhone sales fell by approximately 5% in the final quarter of 2024, as disappointing upgrades and fierce competition from Chinese smartphone makers impacted the company’s performance. According to Counterpoint Research, Apple’s market share dropped to 18%, a 1% decline from the previous year, while rivals like Xiaomi and Vivo made significant gains in the Chinese market.
Apple’s overall sales for the year saw a 2% decrease, even as the global smartphone market grew by 4%. This downward trend was mirrored in quarterly data from International Data Corp. (IDC), which reported a 4.1% drop in iPhone shipments during the fourth quarter compared to the same period in 2023. In contrast, the global industry as a whole saw a 2.4% increase in smartphone shipments during that time.
Chinese Competitors Surge
One of the standout stories of the quarter was the rise of China’s largest smartphone vendors. IDC analyst Francisco Jeronimo highlighted that these companies reached a historic milestone, shipping 56% of the global smartphone volume, the highest ever in a single quarter. Companies like Xiaomi, Vivo, and Huawei have been gaining significant ground, further challenging Apple’s dominance.
Apple’s AI Strategy Faces Roadblocks
A major factor in Apple’s struggle in key markets like China is the lack of its new artificial intelligence suite, Apple Intelligence, which has not yet launched in the region. This software, heavily promoted in the U.S. as a key reason to upgrade to the iPhone 16, gives other brands a competitive edge, especially as local Chinese companies develop their own AI-powered tools and services.
The Apple Intelligence suite, which includes features like AI writing assistance and image generation, is being rolled out in stages and wasn’t fully available at the launch of the iPhone 16 in September. In China, Apple is working to secure local partnerships that could help integrate these AI features into the market, but it is playing catch-up to homegrown competitors that have already made significant strides in AI development.
Mixed Response to iPhone 16
The launch of the iPhone 16 series received a mixed reception, with some analysts pointing to the lack of Apple Intelligence as a key factor. Tarun Pathak, a director at Counterpoint, noted that while the iPhone 16 struggled in some areas, Apple continued to see growth in markets outside its core regions, such as Latin America.
Despite a drop in overall sales, Apple experienced an increase in the proportion of sales from its premium Pro and Pro Max models, which accounted for over half of iPhone shipments in China, a sign that the company’s higher-end offerings still resonate with consumers.
Rising Competition from Chinese Brands
Meanwhile, Chinese brands like Lenovo’s Motorola, Huawei, and Honor showed rapid growth, with all three developing their own in-house AI tools. These companies are introducing AI-driven features, such as virtual assistants capable of performing tasks on behalf of users, further increasing their appeal in both domestic and global markets.
Apple’s struggle to maintain its foothold in China and other international markets amidst growing competition from local brands highlights the company’s ongoing challenge in the face of both market dynamics and technological advancements in AI.