IPhones hit as China’s foreign smartphone shipments drop 50%

Chinese shipments of foreign-branded smartphones, including Apple’s iPhones, experienced a notable decline in March 2025.

Shipments dropped by 49.6% compared to March 2024.

According to data from the China Academy of Information and Communications Technology (CAICT), a government-affiliated research organization, shipments fell to 1.887 million units from 3.747 million units in March 2024.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Government policy is reshaping China’s smartphone landscape

The recent 49.6% drop in foreign phone shipments reveals how policy interventions can rapidly transform market dynamics.

China’s nationwide smartphone subsidy program launched in January 2025 disproportionately benefits domestic manufacturers by primarily targeting devices priced below CNY 6,000 (approximately $820)1.

This price threshold effectively excludes most of Apple’s premium-priced lineup, contributing to Apple’s 8% year-on-year decline while the overall Chinese smartphone market grew by 2.5-5%1 2.

The effectiveness of this policy approach is evident in Q1 2025 results: Xiaomi captured 19% market share with a 40% year-on-year growth, while Huawei achieved its highest market share since 2021 with a 28.5% increase in sales1.

These subsidy-driven market shifts demonstrate China’s ability to use economic policy tools to strengthen domestic brands while simultaneously creating additional challenges for foreign competitors.

2️⃣ AI capabilities have become a critical competitive differentiator

The absence of AI features in foreign devices is emerging as a significant factor in China’s smartphone market shifts.

Apple’s iPhone 16 series includes AI capabilities that are not available to Chinese consumers due to regulatory challenges, putting the company at a competitive disadvantage3 4 5.

Meanwhile, Chinese manufacturers are actively developing and promoting AI-enabled smartphones specifically designed for the local market, with AI-capable devices projected to exceed 40% of all shipments in 20252.

Tim Cook has explicitly acknowledged that the inability to offer Apple Intelligence features may be hindering the company’s sales performance in China5.