Apple and Huawai’s smartphone rivalry divides China

Apple and Huawai’s smartphone rivalry divides China

A customer talks to a sales assistant in an Apple store as Apple Inc’s new iPhone 14 models go on sale in Beijing, China, September 16, 2022. REUTERS/Thomas Peter/File Photo Acquire Licensing Rights

BEIJING, Sept 12 (Reuters) – Apple’s iPhone 15 drew mixed reactions in its third largest market of China on Wednesday, with many online users liking its faster chip and improved gaming capabilities while others preferred Huawei’s new smartphone.

China remains key for the U.S. tech giant, which unveiled its new iPhone lineup on Tuesday. The company occupies a leading position in China’s premium smartphone market, in part due to the decimation of Huawei Technologies’ (HWT.UL) smartphone business by U.S. export controls, but has also come under scrutiny in the run-up to the iPhone 15’s launch.

Shares in Apple (AAPL.O) and its suppliers were battered last week after reports that Chinese government agencies and state firms were banning staff from using the phone and Huawei launched a new smartphone with an advanced chip, seen as an effort by the Chinese firm for a comeback.

The unveiling of Apple’s iPhone 15 attracted intense discussion online on Wednesday, as new models have done in the past. The new phone goes on sale online in China on Alibaba’s (9988.HK) Tmall marketplace on Sept. 15, and in-stores on Sept. 22.

Topics discussing the new launch attracted 380 million views on social media platform Weibo, with more than 800,000 discussions, including posts, comments and likes, on the iPhone 15.

Many cheered the iPhone 15 Pro’s new 3 nanometer chip and Apple’s pitch that console-quality games such as “Resident Evil 4 Remake”, can be played on the device, appealing to China’s army of mobile gamers.

But several social media users had misgivings about choosing an American brand over a domestically made rival, especially after state media applauded the roll out of Huawei’s Mate 60 Pro earlier this month as a triumph by China over U.S. sanctions.

A survey by Chinese news portal Sina on the social media platform asking participants if they would buy the Mate 60 or iPhone 15 saw 61,000 votes for the Huawei device versus 24,000 for the iPhone 15.

Comparisons of how the Mate 60 Pro could make calls and send texts via satellite, while the iPhone 15 was only capable of satellite texts, also generated significant discussion.

“The iPhone 15 can only send SOS messages via satellite, using last-generation technology already deployed in Huawei’s Mate 60, which supports full satellite calling,” one user wrote.

China’s smartphone market, like the sector globally, is in the midst of a slump and analysts cautioned that this, and the country’s slowing economy, could also weigh on sales of the iPhone 15.

Apple’s third-party retailers in February launched rare discounts on the iPhone 14 Pro by as much as 10% that helped sales but could undermine demand for the latest series, analysts said.

“This is not a good signal for the upcoming 15 series as some demand has been fulfilled before the launch,” said Archie Zhang, a research analyst at Counterpoint. “Before Huawei’s surprise launch, we projected Apple’s sales in China Q3 and Q4 to be flat or slightly weaker than last year.”

Will Wong, an analyst with industry research group IDC, saw recent public sector developments and Huawei posing a challenge for Apple.

“Sales (of the iPhone 15) are not going to be easy, especially since Chinese consumers are either being cautious in spending or shifted their focus to leisure or travel,” he added.

China’s foreign ministry said on Wednesday that Beijing had not issued a ban on the purchase and use of foreign phone brands like Apple but noted that it had noticed media coverage of security incidents related to Apple’s phones.

IDC expects Apple’s share in China’s premium phone market will gradually decline due to increased competition from Huawei.

For the first half of 2023, Apple held 67% of market share for phones priced over $600, followed by Huawei with 15.6%.

($1 = 7.2825 Chinese yuan)

Reporting by Yelin Mo in Beijing and Brenda Goh in Shanghai, and Josh Ye in Hong Kong; Editing by Jacqueline Wong, Alexandra Hudson

Our Standards: The Thomson Reuters Trust Principles.

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Brenda Goh is Reuters’ Shanghai bureau chief and oversees coverage of corporates in China. Brenda joined Reuters as a trainee in London in 2010 and has reported stories from over a dozen countries.
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