Apple has now ranked fifth in cellphone sales in China, being outsold by local brands Huawei, Oppo, Honor, and Vivo.

Chinese cellphones are creeping up on the iPhone performance-wise as some American government harassment has made local buying a nationalistic option. Chinese authorities have also set out local restrictions on Apple, for instance the ban on using iPhones at certain government bodies, state-owned institutions and state-linked companies in at least eight provinces for security reasons.

From December last year, staff from those companies and offices in the well-to-do coastal areas are encouraged to buy and bring with them local brands when going to work. As early as this month, Chinese authorities required Apple to remove WhatsApp of Meta from its China app store and also Threads social media app.

The bans of those products on Apple’s local sale decreases may be hard to differentiate. Despite using more Chinese suppliers and frequent trips by its CEO, Tim Cook, into China, Apple has nevertheless slipped in this year’s local rankings.

The cellphone unit sales of Apple decreased by 25% year-on-year in the first quarter of 2024 and its market share dropped from 20% to 15% over the same period as Canalys, a technology market research organization suggests.

Huawei’s sales surged by 71% and raised its market share from 10% to 17%. While OPPO and vivo lost less market share than Apple, there was still a decline. The Honor, a subsidiary brand of the Huawei, grew its share from 14% to 16%. Xiaomi was sixth just below Apple.

[Sources: Data from Canalys, chart by Asia Times]

CApple isn’t alone out there, because Apple’s market share also experiences decent declines, whereas the information acquired by Counterpoint Market Pulse indicates that Huawei is doing quite well with a considerable increase in its market share. Apple Suppliers List released for last year’s financial statement reveals that Chinese companies are dominating in their numbers and led the way reaching 30%. Taiwanese, American and Japanese ones remained the Nos. 2, 3, and 4, yet their respective performances suffered a decline.

This list is composed of 187 companies that, based on Apple’s information, make up 98% of the total direct spending a company had on materials, manufacturing and assembly which happened in fiscal 2023, which ended in September last year. The increase in the number of Vietnamese and Thai companies on the list is then consistent with the overall movement of the low- cost assembly outs off China to Southeast Asia.

The Nikkei Asia article claims that the growth rate is 40% in the number of suppliers in Vietnam which is now 35 but fact is 13 of these suppliers are Chinese companies. While South Korea saw a decline in the number of the companies on the listing, the number of Europeans rising but their share in the total was only less than 10%. No change reported for the number of Indian companies which stood at 14.

Besides that, it seems more peculiarly that Apple’s list indicates that above 80% of the Apple suppliers are in China.

“There is no chain of supply that is more important to us than China. We’ve been continuously investing and increasing overall.” According to the China Daily during his visit of China in March, this is what the Apple CEO Cook said. “Today’s factories are so advanced.” “Our progress is steady and at the start of a new decade, we will be even further ahead!”

[Sources: Data from Canalys, chart by Asia Times]

DigiTimes identified eight new recent Apple suppliers in China, among them Baoji Titanium Industry, thermal interface and graphite supplier Jones Tech, ultra-fine wire maker Zhejiang Tony Electronic, printing and packaging company Paishing, LED maker San’an Optoelectronics and precision component and manufacturing service provider Shenzhen BSC Technology.

Apple does not simply add suppliers to curry favor with the Chinese government: DigiTimes also noticed that four Chinese companies had been removed from its list of suppliers. And Apple is actively expanding production operations in Southeast Asia and India.

But it is clearly not reducing its involvement with China, where most of its manufacturing is still done and it generated 17% of its revenue in the fourth quarter of 2023. How it will deal with its accelerating loss of market share in China, however, is another story.