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Apple’s Problems in China May Have Just Gotten Worse

The market share for Apple’s iPhone in China has been shrinking for a little while. But a court decision that could halt the sale and import of most models of the iPhone into the country might have a dramatic impact on the company’s bottom line.

Qualcomm, in a statement released Monday, said a Chinese court had found that several iPhone models violated two patents owned by Qualcomm and issued the import/sales ban. (The patents relate to resizing photos and managing apps.) Apple, though, says the ban applies solely to iPhones that run older operating systems, which wouldn’t impact future sales. It’s unclear which company is interpreting the ruling correctly at this time.

The back and forth over the patents isn’t likely to resolve itself soon. Qualcomm and Apple are fighting that battle on several fronts, including U.S. courts, where they’re scheduled to go to trial next April. China, though, is a critical market for Apple and one that has been in the spotlight of late. (Apple is seen as a company particularly at risk in the trade war between the U.S. and China.)

As of 2015, there were over 130 million iPhones being used in the country, according to the Chinese government. That made China the company’s biggest global market at the time. But sales have dropped since then. In the second quarter of 2018, IDC reported the company’s market share had dropped to 6.7%, as sales of Android phones by Huawei and others have surged.

Price points of the iPhone were pointed to as a potential trouble spot, but IDC added “we believe that the company will fare well should it release slightly cheaper options later in the year”.

That seemed to be happening before the ruling. And should sales and imports of those newer phones be blocked, it could give Huawei and other market leaders (including Oppo and Vivo) a chance to extend the growing gap.