Apple Surges Past Rivals To Regain China Smartphone Lead

Apple Inc. has once again seized the crown in China’s fiercely competitive smartphone market, retaking the top spot after iPhone shipments surged by 28% during the crucial holiday quarter, according to Counterpoint Research. This remarkable comeback comes despite a deepening global shortage of memory chips, which has sent shockwaves through the industry and forced manufacturers to rethink their strategies as 2026 gets underway.

The iPhone 17 generation, Apple’s latest flagship, proved to be the star of the show. Counterpoint estimates that these devices accounted for fully one in every five smartphones shipped in China during the December 2025 quarter. That’s no small feat in the world’s largest smartphone arena, where competition is relentless and consumer preferences can shift in the blink of an eye.

But Apple’s gain came at a cost to its rivals. Both Huawei Technologies Co. and Xiaomi Corp., once dominant forces in the Chinese market, saw their shipments tumble by double-digit percentages over the same period. For Huawei, this marks a particularly tough blow, given the company’s recent efforts to reclaim its former glory after years of geopolitical headwinds and supply chain hurdles. Xiaomi, too, has been grappling with the fallout from the global chip shortage and the rising cost of key components.

Overall, the Chinese smartphone market shrank by 1.6% in the December 2025 quarter, according to Counterpoint’s data. While a slight dip, it underscores the broader challenges facing the industry. From Micron Technology Inc. to Xiaomi, companies across the sector have been sounding the alarm about the uncertain impact of the memory chip crunch—a crisis triggered in part by memory makers shifting more of their capacity toward high-end chips for Nvidia Corp.’s booming artificial intelligence business. As a result, memory prices have skyrocketed, squeezing smaller players and making it harder for them to secure long-term supply agreements.

Looking ahead, Counterpoint analysts warn that the pain isn’t over yet. "Memory prices are expected to rise further, increasing by 40%–50% in Q1 2026, followed by an additional increase of around 20% in Q2 2026," they wrote in a recent note. That’s a staggering jump, and it’s forcing smartphone makers to make tough choices. According to Counterpoint, many original equipment manufacturers (OEMs) are now optimizing their product portfolios, with a particular focus on scaling back low-end models in order to preserve profit margins. It’s a strategy that favors companies like Apple, whose entire lineup sits firmly in the premium segment.

Indeed, Taiwan Semiconductor Manufacturing Co. (TSMC) CEO CC Wei highlighted the uneven impact of the memory crunch just last week. "High-end smartphones remained largely unaffected," he noted, pointing to the resilience of brands like Apple. Because Apple’s devices command premium prices and typically use the latest, most advanced components, the company has been able to weather the storm better than most.

But that doesn’t mean Apple is immune to every challenge. For the full calendar year 2025, Apple’s shipments in China climbed 7.5%, placing the company just a hair’s breadth behind Huawei in the annual rankings. Both companies captured roughly a 17% market share, underscoring the razor-thin margins that separate the leaders in this high-stakes race.

Not every Apple product has been a runaway hit, however. The much-anticipated iPhone Air, which was launched later in China than in other markets, failed to live up to expectations. "The iPhone Air underperformed," Counterpoint analyst Ivan Lam said. "The late launch and trade-offs between thinness and the feature set resulted in a slow start." The device’s lukewarm reception serves as a reminder that even the world’s most valuable company can stumble when it comes to timing and product design.

Despite these hiccups, Apple’s overall performance in China is hard to ignore. The company’s ability to grow shipments by nearly a third in a shrinking market is a testament to both its brand power and its knack for navigating supply chain turbulence. And with Chinese consumer subsidies now helping to alleviate some of the cost pressures facing manufacturers, there’s reason to believe that Apple’s momentum could continue—at least for the time being.

These subsidies, rolled out by Chinese authorities as part of a broader effort to stimulate domestic consumption, have provided a much-needed lifeline for smartphone makers grappling with rising component costs. According to Counterpoint, they’re helping to cushion the blow of higher memory prices and giving companies like Apple, Huawei, and Xiaomi a bit more breathing room as they plot their next moves.

Still, the road ahead is anything but smooth. The ongoing memory chip shortage has forced the entire industry to rethink its approach to product development and supply chain management. As memory prices soar—expected to climb another 40% to 50% in the first quarter of 2026 and a further 20% in the second—manufacturers are being pushed to innovate or risk falling behind. For smaller players, the squeeze is especially acute, with many struggling to secure the chips they need to keep their production lines running.

Some analysts believe that this shakeout could ultimately benefit the biggest and most resilient brands. Apple’s focus on high-end devices, combined with its deep pockets and strong supplier relationships, puts it in a strong position to weather the storm. Meanwhile, companies that rely heavily on low-end models may find themselves squeezed out of the market—or forced to make painful cuts to their product lines.

It’s a dynamic that’s already playing out in real time. As Counterpoint’s analysts observed, "Smartphone OEMs are expected to optimise their product portfolios, with a particular focus on scaling back low-end models to preserve margins." In other words, the days of flooding the market with cheap, entry-level smartphones may be coming to an end, at least for now.

For consumers, the implications are mixed. On one hand, they can expect to see more innovation and higher-quality devices as manufacturers double down on their flagship offerings. On the other, rising memory prices and a tighter supply of affordable models could make it harder for budget-conscious buyers to find good deals. It’s a classic case of market forces at work—some will win, others will lose, and everyone will have to adapt.

As 2026 unfolds, all eyes will be on Apple and its rivals as they navigate this new landscape. Will the iPhone maker be able to maintain its edge in China, or will Huawei and Xiaomi find a way to claw back market share? One thing is clear: in the world of smartphones, there’s never a dull moment.