iPhone’s AI Limits in China Fuel 5% Sales Dip

Apple’s iPhone sales reportedly dropped 5% late last year amid stronger competition from Chinese rivals.

Much of this decline can be attributed to the lack of Apple’s artificial intelligence (AI) features on phones sold in China, the company’s biggest market beyond the U.S., Bloomberg News reported Monday (Jan. 13).

The report, citing Counterpoint Research data for the fourth quarter of 2024, said that the iPhone commanded an 18% global market share at the year’s end, down one point.

Bloomberg notes that Apple had been slower to launch AI offerings than its competitors, debuting its Apple Intelligence suite following the introduction of the iPhone 16 in September.

And as noted here last year, experts maintain the company’s embrace of the technology could change how people shop, while also pushing back against the idea that Apple has fallen behind in the AI race.

“Apple may be late to the AI surge compared to Google and Amazon, which have been adding AI to products for years,” The Big Phone Store CEO Steven Athwal said in an interview with PYMNTS. “But Apple has always been about timing and refinement. While others rushed to put out the latest in AI tech, Apple focused on privacy, security and user experience.”

One roadblock: Apple has not yet been able to add that feature to iPhone 16s sold in China. Apple has been trying to secure partnerships with Chinese companies to roll out its AI features.

The country requires generative AI operators to secure government permission before they can debut a product. The Counterpoint research found that Chinese companies like Huawei were among the fast-growing brands, part of a group of firms developing their in-house AI offerings.

And according to Bloomberg, some analysts have warned that investors have been too optimistic in their expectations of Apple’s AI features.

“Apple’s iPhone 16 series was met with a mixed response, partly due to a lack of availability of Apple Intelligence at launch,” Counterpoint director Tarun Pathak said. “However, Apple continued to grow strongly in its non-core markets like Latin America.”

Meanwhile, last week saw a report that Apple was preparing to launch 20 new products for 2025, including the latest iteration of its flagship smartphone.

“The most important new product for Apple in 2025 will be the iPhone 17, but the company should also debut a new Apple Watch, new notebooks and Macs, and possibly the next version of its Vision Pro,” Cash Flow Club investing group leader Jonathan Weber told Seeking Alpha.

“Home accessories could be among the new launches in 2025, and depending on what they include, there is potential for positive surprises here. No matter what, growth will likely depend on rising services revenues this year as well, which has been the case for quite some time.”