Consumers in the world’s second largest economy, China, are buying fewer smartphones, which could pose revenue challenges for some of the largest technology companies.
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Smartphone shipments in the country fell by 21% in the first quarter, their largest decline ever, according to a new report by tech analysis firm Canalys. They are expected to remain sluggish throughout the rest of 2018.
U.S. tech giant Apple was squeezed out of the top four vendors in China, falling to the sixth spot, as the country’s own brands – Huawei, Oppo, Vivo and Xiaomi – increasingly dominated among consumers. Together, these four companies accounted for more than 73% of shipments in the first quarter. Xiaomi and Huawei even managed to grow their shipments – bucking the overall trend.
Canalys analyst Mo Jia said Apple iPhone shipments saw a “significant decline,” as Chinese consumers shied away from its higher-priced models, favoring more affordable options from Huawei or Oppo.
Meanwhile, Samsung saw its shipments halved year-over-year. The South Korean technology giant, however, posted another quarter of record results on Wednesday.
Apple CEO Tim Cook met with President Donald Trump at the White House on Wednesday, where the pair discussed trade amid growing uncertainty about the future economic relationship between Washington and Beijing. Apple manufactures many of its products in China, which is also a big market for the iPhone maker. There are concerns that escalation in the tit-for-tat tariff conflict between the two countries could have an impact on the bottom-line for companies that deal heavily with China.
IPhone sales in the country have slowed throughout the company’s most recent fiscal years, which has caused some long-term revenue concerns among investors.
Canalys expects the tech firm to sell fewer than 14 million iPhone X devices in the first quarter of this year, which is less than half of what it is estimated to have sold in the previous quarter.
Apple remained the industry leader in revenues during the fourth quarter of 2017, following the launch of its newest models.
Smartphones accounted for nearly 70% of Apple's revenue in the first quarter, a percentage that has been steadily rising over the past nine years.