Apple’s iPhone market share in mainland China grew in the second quarter for the first time in two years, according to new research from Counterpoint, but the analyst firm said Apple faces an uphill battle in the second half of the year.

Sales of iPhones in China grew 8 percent year-on-year in the three months to the end of June, the first quarter of growth in the world’s biggest smartphone market since the second quarter of 2023.

The sales boost was in part due to discounts through major e-commerce retailers in May, just ahead of the major 618 mid-year shopping festival.

Domestic competition

Apple also increased trade-in prices on some iPhone models, Counterpoint noted.

“Apple’s adjustment of iPhone prices in May was well-timed and well-received, coming a week ahead of the 618 shopping festival,” said Counterpoint associate director Ethan Qi.

Apple’s May price cuts saw certain models reduced up to one-third in price, and also made some models eligible for the Chinese government’s consumer subsidy programme.

But analyst Ivan Lam said that in the second half sales prospects look less rosy.

“iPhone sales in China will stumble amid weak consumer spending and an ageing iPhone 16 cycle, while tepid iPhone 17 upgrades won’t spark demand,” Lam said.

In part this is due to aggressive moves by rivals such as Huawei, China’s market leader, to target the high-end market segment.

Huawei retained its top market position in China in the quarter and saw sales jump 12 percent year-on-year as it introduced new models and form factors.

AI delays

“Huawei is still riding high on core user loyalty as they replace their old phones for new Huawei releases,” Lam said.

Vivo followed for second place with Apple in third, Counterpoint said.

In the first three months of the year Huawei held 19.4 percent market share in China, according to April Counterpoint figures.

Huawei and Apple were the main drivers of growth in China’s smartphone market in the June quarter, which saw only slight annual growth, Counterpoint said.

In addition to the market slowdown Apple is still struggling to launch AI features in China, long after competitors brought in such features.

Apple has been working with domestic tech giant Alibaba to submit co-developed AI products to Chinese regulators, but approval has been delayed due to political tensions between China and the US, the Financial Times reported last month.