The latest data from the China Academy of Information and Communications Technology (CAICT) also revealed that total mobile phone shipments in the country declined by a much steeper 21.8%, due to reduced demand.

Although Apple is still China’s biggest foreign smartphone brand, its grip on the market is loosening. In March, the company’s shipments plunged nearly 50% year-on-year to 1.89 million units. Its market share is now just 8%. 

Chinese brands like Huawei, Xiaomi, Oppo, and Vivo have overtaken it, not only in volume but in relevance.

The reason is not hard to find. Domestic competitors are offering devices with cutting-edge AI features, lightning-fast charging, innovative foldable designs, and more affordable price tags. 

Meanwhile, Apple has struggled to roll out its own AI-powered tools in China due to regulatory restrictions. 

That delay has cost it precious momentum, especially against Huawei’s Mate and Nova Series, which come fully loaded with AI capabilities tailored for the Chinese market.

To slow the loss, Apple has resorted to aggressive price cuts. During May’s “618” mid-year shopping festival, the company slashed up to 2,530 yuan ($351) off the iPhone 16 Pro (128GB), bringing its price down to 5,469 yuan on JD.com. 

This discount placed some iPhones under the 6,000 yuan threshold, making them eligible for a government subsidy of up to 500 yuan.

This government subsidy, part of China’s nationwide smartphone upgrade programme launched in early 2025, briefly helped Apple’s sales during the first quarter. But by May, the boost had worn off. 

Many consumers are choosing to delay upgrades altogether, instead holding on to their devices for longer periods, yet another blow to Apple’s quarterly outlook.

The signs are all too familiar; a saturated market, longer device lifecycles, and rising nationalist preferences for homegrown tech brands. In a country that now leads in foldable phones and smartphone-integrated AI, Apple’s once-sleek reputation is no longer enough.

CAICT has not disclosed brand-specific figures, but there’s little ambiguity about the trend. Apple is losing ground, and fast. Discounts may win short-term sales, but they won’t fix the core issue, Apple is no longer ahead of the curve in China.

As we move into the second half of 2025, we wonder if Apple can adapt to local demands faster than rivals can out-innovate it. Can it navigate China’s regulatory space while keeping its global brand consistent? And more pressingly; will it remain a major company in what was once its second-largest market?

The numbers show the answer is not guaranteed.

This is its best two-month performance since the COVID-19 era and the profits are largely tied to renewed demand in China and the United States, its two largest and most volatile markets.

The latest data from Counterpoint Research show Apple reclaiming the top spot in China for May. But it didn’t happen by chance. 

The company rolled out aggressive discounts, as high as 2,530 yuan ($351), across e-commerce platforms in China, a move seen as necessary to compete with a fast-rising Huawei and other domestic rivals. Despite the bump in sales, this pricing strategy signals that Apple is under pressure.

“Q2 iPhone performance looks promising at the moment, but as always, swings either way are dictated by two markets – the U.S. and China,” said Ivan Lam, senior analyst at Counterpoint Research.

Apple is manoeuvring around geopolitical and economic challenges. In response to former President Trump’s proposed 25% tariff on non-U.S.-made iPhones, Apple rerouted 97% of its India-produced iPhones to the U.S. between March and May. This tactical shift helped shield the company from higher import costs, for now.

Still, the Chinese government has excluded Apple from some public sector subsidies, and Huawei is regaining the top place in the local market. Analysts believe this could drive Apple’s shipments down in 2025, even if the broader Chinese smartphone market grows by an estimated 3%.

The impact of global trade shifts isn’t limited to distribution routes. High tariff issues are beginning to affect product pricing. Counterpoint warns that Apple’s iPhone 17 series, expected next year, could come with higher price tags as production costs jump by an estimated $900 million due to U.S. tariffs.

Globally, Counterpoint has revised its 2025 smartphone shipment growth forecast to 1.9%, down from an earlier projection of 4.2%. The revision shows the worries over tariff disruptions and economic instability across major markets.

Despite short-term wins, Apple is still facing challenges. Between the strategic rerouting of production, deep discounts, government policy shifts, and growing local competition, the company is walking a tightrope.

And while sales are up today, sustaining that growth will depend on how well it can keep both the Chinese and American markets on its side.