Global shipments of Apple’s (AAPL) iPhone fell nearly 10% in the first quarter despite a broader smartphone market recovery as the company continues to contend with rising challengers from China such as Xiaomi.
According to market intelligence firm IDC, Apple’s Q1 shipments fell 9.6% year over year from 55.4 million units in the first quarter of 2023 to 50.1 million units in Q1 this year. The company’s overall global market share also slipped from 20.7% to 17.3%.
Shares of Apple were off by less than 1% Monday morning.
Apple wasn’t the only company to face headwinds in the quarter. Samsung, the world’s largest smartphone maker, also saw shipments decline, though by just 0.7%.
"The smartphone market is emerging from the turbulence of the last two years both stronger and changed," IDC research director Nabila Popal said in a statement.
"Firstly, we continue to see growth in value and average selling prices (ASPs) as consumers opt for more expensive devices knowing they will hold onto their devices longer. Secondly, there is a shift in power among the Top 5 companies, which will likely continue as market players adjust their strategies in a post-recovery world.”
While Apple is still the second largest smartphone maker in the world by shipment volume behind Samsung, Chinese firms like Xiaomi and Transsion are gaining momentum in the market. Xiaomi saw shipments rise 33.8% in the quarter to 40.8 million units, while Transsion shipments increased 84.9% to 28.5 million units.
Apple’s China business has been a thorn in the company’s side over the last two quarters. iPhone revenue fell 13% in the first quarter of the year and is expected to drop again when the company reports its Q2 earnings on May 2.
China is Apple’s third-largest market behind the Americas and Europe, making the region especially important for the company’s success.
The ongoing geopolitical tensions between the US and China are also adding to Apple’s difficulties. According to Bloomberg, Chinese officials are increasingly telling workers not to use iPhones or other foreign-made phones in the office.
Apple is also working to wean itself off China as its main manufacturing hub. The company is increasingly looking toward Vietnam and India to take on a larger portion of its manufacturing capabilities. CEO Tim Cook posted a series of photos of himself in Vietnam on Monday to X, formerly Twitter.
Apple is facing a series of challenges ranging from declining iPad and Wearables sales to the Department of Justice’s antitrust lawsuit claiming that Apple purposely works to harm competition in the smartphone space. The European Union’s European Commission also hit the company with a $2 billion fine related to antitrust concerns about streaming music. The tech giant is also facing a potential $1 billion lawsuit in the UK related to fees it charges developers that sell apps through the App Store.
Apple shares have taken a beating so far this year, with the stock falling more than 8% since January. Shares of the company are up just 6% over the last 12 months, while the S&P 500 is up more than 20%.
But things could start to turn around for the company in the latter half of the year. Apple is widely expected to announce some form of generative AI-based capabilities during its WWDC developer conference in June. If Apple implements the technology in a new and interesting way, it could provide a boost to iPhone, iPad, and Mac sales.
Still, it’s unclear exactly what Apple will have on offer when it comes to generative AI, and there’s no guarantee it will be a massive success. Google (GOOG, GOOGL) and Samsung have already started introducing the technology on their smartphones, but it’s largely meant for manipulating photos and quick translation.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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