India Apple’s new growth focus after hurdles in China: Report

Global smartphone shipments in 2023 are projected to decline 5% YoY to reach 1.2 billion, the lowest level in almost a decade, but China and emerging markets like the Middle East and Africa (MEA) and India have managed to break out from their declines, according to global TMT research firm Counterpoint Research’s latest 'Smartphone Shipment Forecast'.

Counterpoint associate director Liz Lee says India, maintaining its momentum for premiumisation, is expected to become Apple’s new growth focus. "Apple’s India shipments are predicted to grow 23% YoY in 2024. However, due to its underperformance against Huawei in China, Apple’s global market share will unavoidably decline slightly YoY in Q4 2023 and across 2024.”

At the same time, the shipments are expected to increase 3% YoY in Q4 2023 to reach 312 million units. North America and Europe’s shipments are expected to remain "stagnant". The countries like China and other emerging markets will recover to become the new drivers of growth in the smartphone market from Q4 2023 onwards.

Apple, the usual market leader in Q4 with its newly launched iPhone 15 series, is expected to record a volume decline of 3% YoY in Q4 2023, mainly due to Huawei’s aggressive expansion in China and prolonged delay in smartphone upgrades in Japan.

However, Apple is expected to try to offset the underperformance in volume terms by growing in value terms with a better product mix. The data shows that in Q4 2022, the shipment share of the iPhone 14 Pro series in the entire iPhone 14 series was 61%. In Q4 2023, however, the iPhone 15 Pro series’ portion in the iPhone 15 series is projected to increase to 65%, says the Counterpoint report.

For the next year, the report says the smartphone shipments will increase 3%. "After destocking efforts end with a relatively healthy inventory by the year-end, smartphone shipments in 2024 are projected to grow 3% YoY. We can also expect a recovery focused on emerging markets, backed by increasing consumer confidence and improving macroeconomic conditions," the report adds.

In the next year, Apple is expected to be just in line with the market growth, although it could still face pressures in its traditional markets. "The retention of high-interest rates in the US, which hit consumer spending, and intensifying competition in China’s premium smartphone market, mainly due to Huawei, are expected to hinder Apple’s growth throughout 2024."

Apple rival primarily in China, Huawei, which is driven by its newly launched Mate 60 5G series and older P-series 4G devices, had recorded an enormous success in Q3 2023. Assuming that Huawei can expand the production of its Kirin SoCs via partnerships, the company could grow 37% YoY in 2024, the report forecasts.

Notably, global smartphone sell-through volumes fell 8% YoY in Q3 2023, the 9th consecutive quarter to record a decline, but grew 2% QoQ. The dropping volume of smartphones was attributed to slower than expected recovery in consumer demand. Among all smartphone makers, Samsung continued to lead the global market, capturing a fifth (about 20%) of the total sales in Q3.