Foreign Smartphone Makers Face Steep Decline in Chinese Market as Local Brands Dominate

Foreign smartphone manufacturers, including industry giant Apple, are facing unprecedented challenges in China as shipments of overseas-branded mobile devices plummeted nearly 50% in March, according to data released by the China Academy of Information and Communications Technology (CAICT).

The dramatic decline represents a significant shift in the world’s largest smartphone market, where foreign brands shipped just 1.4 million units in March, down 49.6% from the same period last year, as reported by Reuters. This marks the steepest monthly drop since February 2020, when the initial COVID-19 outbreak severely disrupted global supply chains.

Industry analysts point to several factors driving this trend, including the rising competitiveness of domestic manufacturers like Huawei, which has rebounded strongly despite U.S. sanctions. “Chinese consumers are increasingly favoring local brands that offer competitive features at lower price points,” said Ming-Chi Kuo, an analyst at TF International Securities, as quoted by TechInAsia.

Apple, which has long considered China a crucial market, appears particularly vulnerable. The iPhone maker saw its market share in China drop to 15.7% in the first quarter of 2025, down from 19.7% a year earlier, according to research firm Canalys. The California-based tech giant is reportedly considering raising prices for its upcoming iPhone models, according to Business Live, potentially further complicating its position in price-sensitive markets.

The broader smartphone market in China is showing signs of consolidation around domestic players. Overall mobile phone shipments in China reached 20.6 million units in March, representing a modest 1.6% year-on-year increase, as reported by Pakistan Today. However, this growth was driven almost entirely by Chinese brands, which shipped 19.2 million units, a robust 11.1% increase from the previous year.

Huawei’s resurgence stands out as particularly noteworthy. The Shenzhen-based company has overcome significant obstacles posed by U.S. sanctions to reclaim market share through innovative chip designs and a focus on premium devices that appeal to patriotic Chinese consumers. According to the Economic Times, Huawei’s smartphone shipments in China grew by an impressive 64% in the first quarter of 2025.

“The competitive landscape in China has fundamentally shifted,” says Nicole Peng, Vice President of Mobility at Canalys. “Foreign brands are increasingly being squeezed by local players who have rapidly advanced their technology while maintaining price advantages.”

The trend extends beyond smartphones to the broader consumer electronics sector. CAICT data shows that total mobile phone shipments, including feature phones, reached 21.5 million units in March, with 5G phones accounting for 17.6 million units.

For Apple and other international manufacturers, the path forward in China appears increasingly challenging. As domestic brands continue to innovate and capture consumer loyalty, foreign companies may need to reconsider their strategies for what was once their most promising growth market.

The situation reflects broader geopolitical tensions and technological competition between China and the West, with Chinese consumers increasingly turning to domestic alternatives across various technology sectors. As this trend continues, it could reshape global smartphone market dynamics and supply chains in the years ahead.