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Apple's ( AAPL ) worst smartphone sales performance in China since

2016

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Annual sales decline was one of Apple's ( AAPL ) worst in

China-Canalys

data

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Rivals Huawei, Vivo overtake Apple ( AAPL ) market share-data

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iPhone sales fell in all four quarters, including 25% drop

in

Q4-data

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Apple's ( AAPL ) latest phones lack AI capabilities in China

By Liam Mo and Brenda Goh

BEIJING, Jan 16 (Reuters) - Apple ( AAPL ) was dethroned

as China's biggest smartphone seller in 2024, with local rivals

Vivo and Huawei overtaking the iPhone maker after its annual

shipments in the country declined 17%, data from research firm

Canalys showed on Thursday.

It was Apple's ( AAPL ) largest annual smartphone sales decline in

China since 2016 and involved contraction in all four quarters,

including a 25% drop in the final quarter, according to the

data.

For the full year, budget smartphone maker Vivo captured a

17% market share in China, followed by premium rival Huawei with

16% and Apple ( AAPL ) with 15%, demonstrating the growing sales pressure

it faces from domestic manufacturers in one of its biggest

global markets.

The decline also points to how factors such as the absence

of artificial intelligence capabilities in the latest iPhones

sold in China, where ChatGPT is not available, are eating into

Apple's ( AAPL ) competitiveness.

"This marks one of Apple's ( AAPL ) worst annual performance in

China," Canalys analyst Toby Zhu said.

"Apple's ( AAPL ) premium market position faces multiple challenges:

Huawei's continuous flagship releases, the proliferation of

domestic foldable phones in high-price segments, and Android

brands like Xiaomi ( XIACF ) and Vivo building consumer loyalty through

technological innovations," he said.

Apple ( AAPL ) had previously enjoyed four years of consistent

growth following U.S. sanctions that placed Huawei on an entity

list in 2019, restricting its access to American technology.

But Huawei has made a strong comeback to the premium segment

since August 2023, when it launched new phones with locally-made

chipsets. The Chinese company posted a 24% rise in shipments in

the fourth quarter.

Apple ( AAPL ) did not immediately respond to a request for comment.

The iPhone maker has turned to rare discounts to stimulate

sales. The company launched a four-day promotion in China from

Jan. 4-7, offering price cuts of up to 500 yuan ($68.50) on its

iPhone 16 models through its official channels.

Major Chinese e-commerce platforms have followed suit with

their own promotions. Alibaba's ( BABA ) Tmall marketplace

announced discounts of up to 1,000 yuan ($137) on the latest

iPhone 16 series devices.

Among the top five vendors, mostly budget-focused Xiaomi ( XIACF )

posted the strongest growth with a 29% increase in

fourth-quarter shipments, while Oppo and Vivo recorded gains of

18% and 14% respectively, according to the Canalys data.

Annual shipments of smartphones in China in 2024

increased 4% year-on-year to 285 million units.