Apple (AAPL) is expected to launch its next-generation AI-centric iPhone in September, but the company's Apple Intelligence software platform may not be enough to spark a new sales supercycle in 2025. That's according to UBS Global Research analyst David Vogt, who says Apple's market share losses in China to homegrown companies like Huawei, act as a "material governor on iPhone unit growth."
Apple is heavily dependent on iPhone sales in China, its third-largest market by total revenue behind the Americas and Europe. In 2023, China accounted for $72.56 billion of Apple's $383.3 billion in revenue. The Americas brought in $162.6 billion, while Europe made up $94.3 billion.
The resurgence of Huawei, which was initially kneecapped by US sanctions on high-powered smartphone chips in 2019 but has since released phones with sufficiently advanced chips, has meant increased competition for Apple in China. That, coupled with a tepid economic environment, led to slower iPhone sales in the region in the early part of the year.
Apple has attempted to goose sales for Chinese consumers, offering deep discounts across the Greater China market. And by some measures it's working. According to Bloomberg, iPhone shipments increased as much as 50% in April and 40% in May.
Despite those gains, Huawei could still pose a threat to Apple's growth in China. To counter that, and build sales in other regions, the company announced its new Apple Intelligence platform during its WWDC event in June. But according to Apple, the software, which infuses generative AI technologies across apps ranging from Messages and Photos to the iPhone's Calculator app, requires powerful processors only found in the iPhone 15 Pro line and, presumably, future iPhones.
That means users who want to take advantage of Apple Intelligence but have older iPhones or even the standard iPhone 15 will have to pony up to use the new software.
Still, Apple isn't the only company rolling out generative AI technologies. Google (GOOG, GOOGL) and Samsung have already debuted their own generative AI-powered smartphones, and you can expect more Android device makers to do the same.
Samsung is also gearing up for its annual Unpacked event next week, where it is expected to launch its newest foldable phones, while Google is aiming to announce its own updated Pixel smartphone lineup in August.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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