Chinese IPhone Sales Fell 28% in Q3; Huawei Dominates With 66% Sales Bump, Says Canalys

Huawei’s gain in the China market in Q3 was Apple’s pain, reported Canalys Wednesday. Huawei sold 41 million smartphones in China in Q3 vs. 25 million in the year-ago quarter, while iPhone sales tumbled 28 percent to 5.1 million. Numbers 2-4 vendors Vivo, Oppo and Xiaomi also saw phone sales fall 23, 20 and 33 percent as the China market declined overall by 3 percent year on year, Canalys said. Huawei’s dominant position gives it “a lot of power to negotiate with the supply chain and to increase its wallet share within channel partners,” said analyst Nicole Peng. The company can consolidate its dominance further amid the 5G network rollout due to tight operator relationships in 5G network deployment and control over key components such as local network-compatible 5G chipsets compared with local peers, Peng said. Apple held its position in fifth on an immediate boost from iPhone 11 launches in September, accounting for nearly 40 percent of Q3 shipments, said analyst Louis Liu, saying the U.S. firm is “more prepared than previous years to face strong headwinds in China.” Camera improvements in iPhone 11 models "proved desirable to Chinese consumers," Liu said, and a lower launch price of iPhone 11, coupled with a more flexible channel margin structure for local distribution, "were critical market stimuli for Apple." But Apple faces a challenge as Chinese vendors and operators are set to drive heavy marketing and promotions around 5G in the next two quarters, Liu said, which could "steal its thunder.” Vivo, ZTE, Xiaomi and Samsung have launched 5G-capable smartphones between $500 and $1,000, with more products likely to follow in Q4, said the analyst, but Canalys expects 5G device prices to fall rapidly to attract mass market consumers, “causing first-mover advantage in 5G to diminish in next to no time.”