Apple (NASDAQ:AAPL) reported a 2.1% decline in iPhone shipments in China during the fourth quarter of 2023 compared to the same period in 2022, as revealed by data from research firm IDC.

Facing Chinese Rivals in Smartphone Market

Look, Apple has been going toe to toe with its Chinese counterparts, such as Huawei Technologies and Xiaomi (OTCPK:XIACF) (OTCPK:XIACY), for dominance in the smartphone market, and it’s been a fierce battle.

According to the IDC data, Huawei’s shipments grew by an impressive 36.2% in the fourth quarter of the year.

Huawei cemented its position as the fourth largest smartphone vendor in China during the quarter, commanding a 13.9% market share compared to 10.3% in the same period last year.

Struggles of a Former Giant

Once a heavyweight contender alongside Apple (AAPL) and Samsung (OTCPK:SSNLF), Huawei’s ascent as the world’s leading handset maker was abruptly curtailed by challenging U.S. restrictions in 2019, limiting its access to essential chip manufacturing tools.

In a surprising move in August 2023, Huawei quietly debuted its latest offering, the Mate 60 Pro, hinting at the potential use of a 5G-capable chip. The smartphone was powered by its SoC Kirin 9000S, with sales surging 37% year-over-year, attributed to the Mate 60 series.

Rotating Chairman Ken Hu indicated Huawei’s anticipated revenue to surpass 700 billion yuan (roughly $98.7 billion) in 2023, demonstrating resilience despite substantial challenges.

Apple’s Triumph in the Annual Battle

Apple (AAPL) clinched the top spot as the leading smartphone seller for 2023 in China, displacing Vivo with a commanding 17.3% market share. While this marked Apple’s first ascendancy in China, experts foresee new challenges to its dominance in 2024.

IDC pointed out that Apple’s hold on the high-end market faced stiff competition from rival products and was further weakened by infrequent product upgrades, diminishing the allure of iPhones.

Nonetheless, Apple’s sales surged through third-party channels, leveraging discounts and promotions to attract a wide customer base, underscoring its resilience amid fierce competition.

The Storm on the Horizon

Reports surfaced last week of Alibaba (BABA) and JD.com (JD) offering steep discounts on iPhones, surpassing even Apple’s own offerings, in anticipation of the Chinese Lunar New Year.

Adding to the mounting challenges, Jefferies’ analysts disclosed a 30% drop in Apple’s Chinese iPhone sales during the first week of 2024 compared to the same period a year earlier. Projections indicate a double-digit decline in iPhone volume for the year.

While Huawei successfully gained market share, its shipments fell short of estimates at 35 million units, likely impacted by supply constraints.

The Upcoming Showsdown in Earnings

Apple (AAPL) is primed to release its earnings on Feb. 1, offering a crucial glimpse into its future amid the dynamic landscape of the Chinese smartphone market.

The full-year 2023 shipment volume in China’s smartphone market tallied 271 million units, reflecting a 5% decrease from the preceding year. Meanwhile, the fourth quarter shipment volume amounted to 73.63 million units, as revealed by IDC’s data.