Why In China's Apple And Samsung Smartphones Become A Graveyard

China’s Apple and Samsung Smartphones Become A Graveyard There was a hidden cause. Apple and Samsung Electronics, which dominate the global smartphone market, also have markets where they are struggling. China is a huge market with a population of 1.5 billion. Samsung Electronics’ market share fell to the ‘1% range.’ Apple’s iPhone sales, which had recently been on the rise, also dropped significantly in the fourth quarter of last year.

The information technology (IT) industry cites Chinese people’s patriotic consumption and Huawei’s revival as the reasons for this. There is an assessment that there is a separate-hidden cause. Experts point to the rapid progress of MediaTek, a Taiwanese fabless (semiconductor design company) that supplies application processors (APs), a core semiconductor for Chinese smartphones. This means that as MediaTek AP raised the level of Chinese smartphones, the influence of Apple and Samsung weakened.

Even Apple, Which Was Doing Well, Saw Its Growth Slowdown In China.

According to the IT industry on the 4th, Apple’s sales in China in the fourth quarter of last year recorded $20.8 billion. It decreased by 13% compared to the fourth quarter of 2022 ($23.9 billion). Among major markets such as North America and Europe, China is the only place where Apple’s sales have declined. Regarding the unexpected slump recorded during the peak iPhone season, Apple Chief Financial Officer Luca Maestri explained, “China is the most competitive market in the world.”

Market share is also decreasing. Apple’s market share in the fourth quarter of last year was 20.2%, lower than the same period last year (23.7%). There is also a survey (investment bank Jefferies) showing that iPhone sales in China in the first week of January decreased by 30% compared to the previous year.

Samsung Electronics’ situation is even more serious. Ten years ago, in 2013, Samsung Electronics recorded a smartphone market share of 13% in China, but it has now fallen to the level of being classified as an ‘other company’ according to market research company data. In the industry, it is estimated that it is around 1%. Samsung Electronics even formed a task force (TF) team to restore its influence in the Chinese market, but it is not achieving any results.

Competitiveness of Taiwan’s MediaTek AP for Chinese smartphones increases.
The reasons for Apple and Samsung’s sluggish performance in the Chinese market include:
The patriotic consumption craze in the country due to the deepening conflict between the U.S. and China.
the growth of local smartphone companies such as Xiaomi, Oppo, and Vivo;
the revival of the traditional powerhouse Huawei’s smartphone business. I am singled out.

According to market research firm BCI, Xiaomi (16.5%) ranked first in Chinese smartphone market share in December last year. If you include Longyao (15.9%), Vivo (15.5%), Oppo (15.3%), and Huawei (14.0%), the Chinese company’s market share reaches 77.2%.

Ming-Chi Kuo, a researcher at Taiwan’s TF Securities who specializes in Apple, recently predicted, “Apple’s weekly shipments in China have decreased by 30 to 40 percent in recent weeks compared to a year ago,” and added, “This downward trend is expected to continue.” There is also an analysis that Taiwan’s AP company MediaTek is behind the Chinese smartphone company’s good performance. MediaTek was founded in 1997 as a fabless company and initially developed semiconductors for TVs. MediaTek, which developed its technological capabilities, developed APs for 3G and 4G smartphones in the 2010s and increased its supply to Chinese smartphone companies by focusing on ‘price-performance ratio’.

As development of its own AP in China became difficult due to the US semiconductor export regulations in 2019 and 2020, MediaTek is actively expanding its supply to Xiaomi and other companies with premium AP ‘Dimensity’. The ability to improve AP performance by utilizing TSMC, a foundry (semiconductor consignment production) company of Taiwanese nationality, is also evaluated to have had a positive impact on strengthening its status.

‘Mutual Aid’ Between China And Taiwan, Mediatek Rises To No. 1 In The World.

As evaluations emerged that ‘Dimensity AP’s performance is good,’ the market share rose rapidly. In the third quarter of last year, the leading company in global smartphone AP market share (based on shipment volume) was MediaTek (31%). It surpassed Qualcomm (28%), Apple (18%), and Samsung Electronics (5%). MediaTek’s AP is installed in the latest smartphones such as ‘Redmi Note 13’ (Xiaomi) and ‘X100 Pro’ (Vivo) recently released in China.

The recent AI phone craze is pointed out as a variable. Some predict that Samsung Electronics will do well with the world’s first AI phone, the Galaxy S24. There is also some cautious opinion that “it will not be easy.” This is because Chinese companies are also rushing to release AI phones. Locally, there is an evaluation of the AI phone made by a local Chinese company, saying, “AI performance is lower than that of the Galaxy S24, but it is no better as an entry-level phone.”

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