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In the first quarter of 2025, Apple (AAPL) experienced a significant decline in its smartphone shipments in China, marking a 9% drop compared to the previous year.

This downturn represents Apple’s seventh consecutive quarter of reduced shipments in the region, with the company now holding a 13.7% market share. In stark contrast, Xiaomi, the leading brand in China’s smartphone market, saw a substantial 40% rise in shipments, reaching 13.3 million units.

This growth contributed to an overall industry increase of 3.3%. Analysts, including Will Wong from IDC, attribute Apple’s challenges to its high pricing strategy, which has limited its ability to leverage new government subsidies introduced in January.

Apple’s Sales Slump in China as Government Subsidies Did Not Benefit Premium Pricing
 

Apple’s recent performance in China highlights a challenging period for the tech giant, as it struggles to maintain its foothold in a competitive market. The company’s shipments fell to 9.8 million units, a stark contrast to Xiaomi’s impressive growth.

The introduction of government subsidies, which provide a 15% refund on electronics priced under 6,000 yuan, has not benefited Apple due to its premium pricing. This strategic approach may require reevaluation as competitors capitalize on these incentives to boost sales and market presence.

AAPL Remains a ‘Buy’ Despite Recent Challenges in China
 

Despite the recent challenges in China, Apple’s market capitalization remains robust at $2.959 trillion. Analysts maintain a ‘Buy’ recommendation for the stock, with a mean target price of $237.39. The company’s financial metrics, including a trailing P/E ratio of 31.27 and a forward P/E ratio of 23.70, continue to reflect its strong market position.

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