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Apple's Next-Gen iPhone and Market Challenges
Apple is expected to unveil its next-generation, AI-centric iPhone in September, but there are concerns that the company's Apple Intelligence software platform may not be sufficient to trigger a new sales supercycle in 2025. Apple's market share in China, its third-largest market by revenue, has been eroded by competition from homegrown companies like Huawei. UBS Global Research analyst David Vogt points out that these market share losses could significantly constrain iPhone unit growth.
In 2023, China contributed $72.56 billion to Apple's $383.3 billion in revenue, placing it behind the Americas ($162.6 billion) and Europe ($94.3 billion). Apple's dependency on the Chinese market has been challenged by Huawei's resurgence. Initially hindered by US sanctions in 2019, Huawei has since launched phones with sufficiently advanced chips, increasing the competition for Apple in China. The economic environment has also been a factor, contributing to slower iPhone sales earlier in the year.
Efforts to Boost Sales
To counteract these challenges, Apple has implemented deep discounts across the Greater China market to stimulate sales. These efforts have yielded some success, with iPhone shipments reportedly increasing by 50% in April and 40% in May. Despite these gains, Huawei remains a considerable threat to Apple's growth in the region.
Innovation and Competition
In addition to addressing competition from Huawei, Apple is focusing on boosting sales globally. At its WWDC event in June, the company introduced its new Apple Intelligence platform. This software integrates generative AI technologies into various apps, including Messages, Photos, and even the Calculator app on the iPhone. However, this advanced software requires powerful processors available only in the iPhone 15 Pro line and presumably future iPhones. This means that users with older iPhones or the standard iPhone 15 will need to upgrade to leverage the new software fully.
Apple is not alone in the generative AI space. Google and Samsung have already launched their own generative AI-powered smartphones, and more Android device manufacturers are expected to follow suit. Samsung is preparing for its annual Unpacked event next week, where it is likely to introduce its latest foldable phones. Meanwhile, Google plans to announce its updated Pixel smartphone lineup in August.
