Apple has dominated the high-end smartphone market in China since the US imposed sanctions on Huawei, forcing the company to abandon its plans to produce 5G phones. Over the years, Apple CEO Tim Cook has been deft in navigating geopolitical tensions between the US and China that have spilled over into multiple industries.
According to WSJ , Huawei's new phone model and leaked information about the ban on Chinese officials using iPhones will put Apple at risk because most of its products are assembled in China.
By the second quarter of 2023, China will become the largest iPhone consumer market, accounting for 24% of sales.
In China, the first batch of Mate 60 Pro phones sold out in just a few hours, a sign that Huawei can win back customers from rival Apple.
Martin Yang, an analyst at investment firm Oppenheimer, said the ban, if true, and the new Huawei phone model's big impact on the iPhone, would push more Android users to buy Huawei phones or iPhone users to switch to Huawei. Yang said Apple could lose 10 million iPhone orders in 2024 because of the Mate 60 Pro. According to Counterpoint Research, the company shipped 224.7 million iPhones in 2022, so the 10 million figure would account for about 4.5% of total iPhone shipments.
Although the news that China is banning officials at central government agencies from using iPhones has not been officially announced, it could damage Apple's reputation. Xiaomeng Lu, CEO of risk consultancy Eurasia Group, said that local government officials or those who work with the Chinese government may stay away from Apple products.
While Huawei isn’t calling the new device a 5G phone, tests by consumers and Chinese testing agencies have shown it can reach peak download speeds of 500 to 800 megabits per second. That would allow users to download a high-definition movie in under a minute, far exceeding the speed limit of around 300 megabits per second on 4G networks.
In addition, this phone model also has a satellite calling and messaging feature, helping users stay connected in areas without traditional mobile coverage. Meanwhile, Apple only has a satellite SOS emergency messaging feature. The Mate 60 Pro's product box states that this is a satellite mobile terminal, instead of the digital mobile device used for previous phone products.
In 2019, the US Department of Commerce placed Huawei on a trade blacklist. US officials and members of Congress said Huawei's products posed a national security threat. Huawei was forced to sell off its low-end phone business and suffered a hit to international sales. Huawei executives often describe the setback as a fight for survival.
According to research firm IDC, the iPhone maker accounted for 65% of the market share of smartphones priced above $600 in China in the second quarter of 2023, while Huawei had 18%. Before the full impact of US sanctions, Huawei's high-end market share was almost equal to Apple's in the first half of 2020.
Former Foxconn US CEO Alan Yeung said a Huawei phone now backed by China would certainly have an impact on Apple, but it's hard to say how much.
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