Apple (AAPL) is expected to launch its next-generation AI-centric iPhone in September, but the company’s Apple Intelligence software platform may not be enough to spark a new sales supercycle in 2025. That’s the view of UBS Global Research analyst David Vogt, who said market share loss in China to home-grown players like Huawei is a “significant restraint on iPhone unit growth.”
Apple relies heavily on iPhone sales in China, its third-largest market by total revenue after the Americas and Europe. China will account for $72.56 billion of Apple’s $383.3 billion in revenue in 2023, compared with $162.6 billion from the Americas and $94.3 billion from Europe.
Huawei’s comeback after initially being hit by U.S. sanctions on high-end smartphone chips in 2019 but has since launched phones with sufficiently advanced chips means Apple faces tougher competition in China, which, combined with a weak economic environment, led to sluggish iPhone sales there earlier this year.
Apple has been offering deep discounts across the Chinese market in an effort to boost sales to Chinese consumers, and by some measures, it seems to be working: iPhone shipments rose 50% in April and 40% in May, according to Bloomberg.
Despite these gains, Huawei could still pose a threat to Apple’s growth in China. To counter this and boost sales in other regions, the company unveiled the new Apple Intelligence platform at its WWDC event in June. But Apple says the software, which builds generative AI techniques into apps ranging from Messages and Photos to the iPhone’s calculator app, requires powerful processors that are only found in the iPhone 15 Pro series and possibly future iPhones.
This means that users who want to take advantage of Apple Intelligence but have older iPhones or the standard iPhone 15 will have to pay to use the new software.
Still, Apple isn’t the only company deploying generative AI technology: Google (GOOG, GOOGL) and Samsung have already unveiled their own generative AI-powered smartphones, and Android device makers are expected to follow suit in the future.
Samsung is also gearing up for its annual “Unpacked” event next week where it is expected to unveil its latest foldable smartphone, while Google is aiming to unveil its latest Pixel smartphone lineup in August.
Contact Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter. Daniel Howley.
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