Apple’s Q2 2025 iPhone revenue grows 1.9% globally despite China challenges, including Huawei’s resurgence and Gen Z’s shift to AI wearables. India now manufactures 78% of US-bound iPhones.
While iPhone revenue climbed to $46.8B globally, Apple’s China smartphone share fell to 15.2% – its lowest since 2020 – as Huawei captures 18.4% of premium buyers with AI-satellite hybrid devices.
Four-Pronged Pressure in China
Counterpoint Research reveals Huawei secured 18.4% of China’s premium smartphone market in Q1 2025 (May 8 data), up from 12.6% year-over-year, driven by Mate 70 sales. Beijing’s Directive No. 23, issued 7 May 2025, mandates 45% domestic tech procurement quotas for state enterprises by 2026. “This directly impacts Apple’s institutional sales, which accounted for 22% of their China revenue last fiscal year,” notes Counterpoint analyst Mia Qian.
Manufacturing Exodus Accelerates
Foxconn’s $1.5B Tamil Nadu investment (12 May) for iPhone 16 camera modules reduces Apple’s China-based production to 8% of global output. However, Digitimes reports (11 May) that Chinese supplier Luxshare Precision simultaneously secured 14% of Vision Pro orders while expanding automotive/AI partnerships with BYD. “Luxshare embodies Apple’s dilemma,” says TechAsia’s Rajiv Mehta. “They’re both a critical AR supplier and autonomous driving competitor using similar sensor tech.”>
Gen Z’s AI Pivot Reshapes Market
Canalys data shows 33% of Chinese buyers under 25 now prioritize AI wearables over smartphones, prompting Xiaomi’s 9 May launch of OpenAI-integrated smart glasses. “The iPhone remains iconic but risks becoming a secondary device for youth seeking ambient computing,” warns Canalys VP Nicole Peng.
Historical Parallels and Pathways
Apple’s current 15.2% China market share mirrors its 2016-2017 slump before rebounding to 19% in 2020 through aggressive trade-in programs. However, Huawei’s supply chain recovery – producing 70% components domestically vs. 30% in 2020 – creates new competitive dynamics. The ‘India pivot’ follows Samsung’s 2018 strategy shift after losing China dominance, though Apple faces steeper challenges with 92% components still sourced from Chinese suppliers versus Samsung’s 65% in 2020.
