Apple iPhone 16 Sees 20% Sales Surge in China, But AI Absence Prompts Early Price Cuts

Apple Inc’s AAPL iPhone 16 scored a win in China in its first three weeks, highlighting the rising demand for luxury smartphones paired with artificial intelligence features. China is a crucial market for the company.

The iPhone 16 performance coincided with China’s stimulus plans and the upcoming holiday season.

Apple’s latest smartphone model clocked a sales growth of 20% year-on-year in their first three weeks, beating the iPhone 15, Bloomberg cites Counterpoint Research data.

Also Read: Apple To Launch Budget iPhone in 2025, Aims for Market Share Gains from Huawei and Xiaomi

The shift to the premium models fueled sales of the top-end Pro and Pro Max models by 44% year-on-year.

Counterpoint’s Ivan Lam attributed the iPhone 15’s weak initial response to production issues and competition from Huawei Technologies Co’s Mate 60 series.

However, challenges continue to lurk for iPhones from China’s domestic companies, like Vivo’s X200 Pro flagship, Huawei’s next-generation Mate device, and Xiaomi Corp XIACY XIACF and Oppo’s upcoming offerings.

Lam also flagged the postponement of purchases by Chinese consumers until November’s Singles’ Day to avail themselves of discounts from Alibaba Group Holding BABA and JD.com Inc JD.

Separate reports indicated Chinese online retailers PDD Holdings Inc PDD Pinduoduo and Alibaba’s Taobao doled out discounts on the iPhone 16 series ahead of its official release due to its lack of AI features, which will likely roll out for Chinese users in 2025.

Pinduoduo started selling the iPhone 16 Plus with 512 gigabytes of storage at a 10% discount from the official price. The 128GB iPhone 16 is being sold at an even steeper 11% discount.

Both Pinduoduo and Taobao marketplace have slapped a 4% discount on the 256GB version of the high-end iPhone 16 Pro Max. Tmall shopping platform also offers buyers the option to pay for a new Apple handset in 24 instalments without interest charges.

Kuo Ming-chi of TF International Securities told SCMP that the global pre-order sales for the iPhone 16 are down 13% compared to last year’s iPhone 15 launch, partly due to the absence of Apple Intelligence and intense competition in China.

International Data Corporation (IDC) had projected a recovery in the smartphone market, which was hampered by the supply chain crisis fueled by the 2020 pandemic outbreak in China.

IDC pointed to the success of generative AI in the upcoming iPhone 16 and Apple’s ability to establish local AI partnerships in China as potential growth factors. It forecasts that GenAI smartphones will capture 18% of the market by 2024, fueled by premium device trends.

Apple stock gained 39% in the last six months. Investors can gain exposure to the stock through Vanguard S&P 500 ETF VOO and Invesco QQQ Trust, Series 1 QQQ.

Price Action: AAPL stock traded higher by 1.79% at $236.30 premarket at the last check on Friday.

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Photo courtesy: Apple