After a decade of frantic progress, China’s smartphone market is hitting a pace bump as COVID-19 roils the world’s second-largest financial system.

The nation’s smartphone shipments dropped 14% year-over-year in 2022, reaching a ten-year low, in accordance with analysis agency Counterpoint. It was additionally the primary time that China’s handset gross sales had slid beneath 300 million models in ten years, in accordance with Canalys. Even in December, which has traditionally seen seasonal jumps in gross sales, China recorded a 5% quarter-to-quarter decline in smartphone shipments.

The three-year-long stringent “zero-COVID” coverage that disrupted companies and dampened client confidence, coupled with macroeconomic headwinds, spelled an finish to China’s years of double-digit progress. Troubles mounted when the abrupt leisure of COVID-19 restrictions in early December resulted in a surge in instances, additional including stress to the waning financial system. Final 12 months, China’s GDP grew 3%, its lowest in a long time apart from 2020.

Alibaba’s annual buying bonanza in November supplied some clues to China’s weakening spending energy. The occasion, which is usually in comparison with Black Friday and seen as a bellwether for the nation’s client urge for food, didn’t disclose its ultimate gross sales quantity in 2022 for the primary time since its inception in 2009.

There was one winner on this gloomy time. Apple completed the 12 months with an all-time excessive market share of 18% because of “its aggressive promotions” and “resilient” demand within the high-end section in China, in accordance with Canalys. Its ascent additionally coincides with Huawei’s fall from grace within the premium handset market since U.S. sanctions minimize off its entry to high-end chipsets.

Apple’s relationship with China stays a fragile one. The nation just isn’t solely considered one of its greatest markets however has been the manufacturing spine that created the world’s most respected firm immediately. Previously few years, nonetheless, COVID-related disruptions, reminiscent of a uncommon employee protest at a significant Foxconn plant that delayed manufacturing, prompted the {hardware} juggernaut to rethink its provide chain technique. The Wall Road Journal reported in early December that Apple was trying to relocate a few of its provide chains out of China to different elements of Asia, together with Vietnam and India.

India, specifically, is predicted to play a much bigger function in Apple’s provide chains because the agency plans to broaden its manufacturing capability within the nation to produce 25% of all iPhones by 2025, in accordance with JP Morgan analysts.

In This fall, the highest smartphone manufacturers in China by cargo had been Apple, Vivo, Oppo, Honor (which was spun off from Huawei following U.S. sanctions on the father or mother agency), and Xiaomi.