Huawei’s reaction threatens Apple and takes Tim Cook to China – 10/30/2023 – Market

Apple’s difficulties in China soared two months ago, when Huawei surprised by launching its new smartphone with a chip for 5G connection, Mate 60 Pro, two weeks before the arrival of the iPhone 15. In nationalist fervor, online and then physical stores were filled from clients. Now numbers are beginning to emerge that highlight the size of the challenge.

Three industry research consultancies, Counterpoint, Jefferies and Canalys, released positive data for the Mate 60 Pro, such as the sale of 1.6 million devices in just a month and a half in the Chinese market, and negative data for the iPhone 15, with sales 4.5% below what the previous model, iPhone 14, had achieved in the first weeks after launch.

This past Thursday, in a new report, Counterpoint stated that Huawei grew 37% in the third quarter, compared to the period in the previous year, due to the impact of the new cell phone on a single month of the quarter, September. The company now occupies 12.9% of the Chinese smartphone market, already close to surpassing Apple again, which has 16%.

The Mate 60 Pro “caused a huge shock in the market”, said Ivan Lam, senior analyst at the consultancy, when releasing the results. Canalys, in turn, emphasized that it is not only Apple that has been suffering, but also Chinese brands. iPhone sales fell 6% year on year, while Oppo and Vivo models lost even more, 10% and 26% respectively.

But the central dispute is really between Huawei and Apple, in the higher quality and price range. And October proved to be, once again, “a terrible month for Apple in China”, in the assessment of technology analyst TP Huang, to the point that Tim Cook “showed up to do damage control”. The CEO returned to the country to see authorities and suppliers — and lower prices.

According to the Beijing-based Global Times newspaper, linked to the Chinese Communist Party, on the e-commerce platform Pinduoduo the main iPhone model started to be offered this week for 5,198 yuan, against 5,999 of the sales price established by Apple. Competing platforms, such as Alibaba’s Taobao, are also said to be adopting similar reductions.

Analyst Ma Jihua believes that this could indicate a preparatory action for shopping on Double 11 or Singles’ Day, November 11, the annual date for a discount battle between Chinese e-commerce giants. But it also “reflects the declining appeal of the iPhone” with the country’s consumers, with the return of the biggest competitor.

Four years ago, Huawei was banned by the American government from continuing to acquire advanced chips for its smartphones from Taiwan’s TSMC, which uses partly American technology. It was the beginning of the United States’ siege on the Chinese company — which grew so much that it surpassed not only Apple in global sales, but the Korean Samsung, becoming the world leader.

With these and other sanctions, Huawei almost disappeared from the smartphone market, to the point that its founder warned employees, at an internal event, that it was fighting for its survival. The announcement of the Mate 60 Pro, with a chip designed by Huawei and manufactured by the Chinese company SMIC, revived local customers and even other companies, which have announced leaps in technology.

During the visit that culminated in the price cuts, Cook published messages on his Sina Weibo account, including a photo of a famous bridge in Sichuan taken with an iPhone 15, spoke to state media hailing Chinese innovation and met officials such as the Minister of Commerce, Wang Wentao, and Vice Prime Minister Ding Xuexiang.

But the most significant visit was to a Chinese manufacturer of Apple products, also in Sichuan and with a video on Weibo. “We have worked with Luxshare for over a decade, and now they are producing some of our most advanced devices, including the iPhone 15 Pro Max,” Cook wrote in his account, thanking the company’s president, Wang Laichun.

Wang worked at Foxconn, China’s top iPhone maker, before founding competitor Luxshare. Cook’s visit and praise coincided with Apple’s efforts to reduce dependence and costs on Foxconn, which was resisting and thus making it difficult to offer the new iPhone at more competitive prices.