How Huawei’s Revival Has Sent Apple Inc. To Indian Shores Setting Out To Be Tech Giant’s 3rd-Largest Market By 2026.

Apple Inc. is intensifying its focus on India, positioning the country to become its third-largest market globally—after the U.S. and China—by 2026. Industry projections suggest local iPhone sales could surge by up to 20% in 2024, reaching as many as 15 million units. This strategic shift to India and other emerging markets comes as Apple struggles with a significant market-share decline in China, driven by the resurgence of Huawei.

Currently, India ranks as Apple’s fifth-largest market, trailing Japan and the UK in third and fourth places, respectively. Analysts attribute India’s ascent on Apple’s sales and revenue charts to several factors – greater availability of financing options, aggressive festival-season discounts, and a marked consumer preference for premium products due to rising disposable incomes.

India’s Market Share Gains And Decline In China

In contrast to India’s upward swing, Apple has faced a 10-percentage-point drop in its Chinese market share over the nine months ending September 2024. Huawei’s revival has intensified competition in the premium segment, historically Apple’s stronghold.

Canalys data reveals Apple’s market share in China declined from 24% in Q4 2023 to 14% by Q3 2024, with shipments plateauing at 10 million units.

On the other hand, India has shown remarkable growth. Apple shipped 8.5 million units to India in the first three quarters of 2024, surpassing its total 2023 shipments. With a projected 4 million units expected in Q4, Apple is on track to deliver between 12 and 12.5 million units for the year, according to Canalys estimates.

India’s growth is not just about volume but also strategic investments. Financing options and localized production are key to Apple’s success.

“Premiumisation in India, coupled with accessible financing, has made premium smartphones more affordable, bolstering Apple’s position in this segment,” said Shubham Singh, Research Analyst at Counterpoint Research.

Counterpoint Research anticipates India will become Apple’s third-largest market by 2026, driven by consistent growth in shipments and evolving consumer preferences.

Revenue Dynamics And Localisation

However, despite the surge in unit sales, Apple’s absolute revenue growth in India may experience slight pressure due to increased localisation and reduced import duties. These factors, are part of Apple’s long-term strategy to deepen its presence in the Indian market while maintaining competitive pricing.

How Huawei’s Resurgence Forced Apple To Rethink Strategy.

For those who thought Huawei was deadbeat, it’s remarkable resurgence has instead reshaped global tech compelling competitors like Apple to recalibrate their strategies. The Chinese tech giant, once predicted to be out of the smartphone race, has made one of the most dramatic comebacks in the industry’s history.

At the heart of Huawei’s revival is its in-house Harmony OS, now powering over 900 million devices globally. “We have achieved in 10 years what our Western counterparts accomplished in 30, securing independent control of core operating system technologies,” said Richard Yu, Chairman of Huawei’s Consumer Business Group, at a recent developer forum.

This self-reliance is a direct response to the U.S. trade blacklist imposed in 2019, which barred American companies from supplying Huawei with critical software and hardware, including Google’s Android OS.

The ban severely disrupted Huawei’s smartphone business, leading many to write off its future. But Huawei defied the odds, emerging stronger and diversifying its portfolio into electric vehicles and artificial intelligence.

Emerging Global Contender in AI and EVs

Huawei’s ambitions extend beyond smartphones. The company has entered the electric vehicle (EV) market, challenging Tesla with its own sedan model. In artificial intelligence (AI), Huawei is gaining recognition as a formidable competitor. Earlier this year, Nvidia identified Huawei as a key rival in the production of processors for AI systems.

Yu put focus on the efficiency of Huawei’s Ascend processors, claiming they outperform mainstream international offerings in training large language models. This competitive edge positions Huawei as a serious player in the growing AI market.

Apple Inc. Response

Huawei’s resurgence has triggered ripple effects across the tech industry, with Apple feeling the heat in its once-dominant premium segment in China.

Huawei’s market share gains have directly contributed to Apple’s declining foothold, forcing the Cupertino giant to shift its focus to emerging markets like India. The company’s strategic investments in localized manufacturing and financing options aim to capture this opportunity, offsetting the challenges posed by Huawei’s revival in China.

Huawei’s Stunning Comeback. Smartphone Industry

Huawei’s revival in the smartphone industry is not just a rebound—the company’s flagship smartphone sales surged 72% in the first five months of 2024 compared to the previous year, indicating Huawei’s intent to reclaim its position as a global leader despite ongoing U.S. sanctions.

The Shenzhen-based conglomerate stunned industry observers with the launch of its Mate 60 Pro in 2023, featuring an advanced processor that sparked inquiries from the U.S. government. The debut raised questions about how Huawei acquired such technology, given stringent U.S. restrictions aimed at curbing China’s access to foreign semiconductor innovations.

Huawei’s incredible performance extends beyond smartphones. The company’s net profit skyrocketed 564% to $2.71 billion in Q1 2024, marking its fastest revenue growth in four years. This growth was fueled by a revitalized consumer segment and diversification into new businesses, such as smart car components.

This resurgence has directly impacted Apple, particularly in the premium smartphone segment in China. Once the market leader with a near 20% share in Q1 2023, Apple fell to third place in Q1 2024, with its share dropping to 15.7%. In contrast, Huawei’s share climbed to 15.5% from 9.3% the previous year, according to Counterpoint Research.

In response, Apple aggressively slashed prices in May to revive sales in China, its largest overseas market. However, the growing preference for Huawei’s flagship devices, coupled with nationalistic sentiment, poses significant challenges for Apple’s premium dominance in the region.

A Purely Homegrown Alternative

Huawei has doubled down on self-reliance, with its Mate 70 smartphone in 2024, which features the HarmonyOS Next operating system; this entirely homegrown technology eliminates dependency on Android-based apps, presenting a compelling alternative to Apple’s iOS and Google’s Android.

“This is our most powerful phone in the Mate series,” said Richard Yu, Chairman of Huawei’s Consumer Business Group, at the launch event. From 2025, all Huawei smartphones and tablets will exclusively run on HarmonyOS Next, signaling a bold shift in the company’s technology roadmap.

Huawei’s Bold Break from Android

Huawei’s shift away from the Android ecosystem is not just a technical evolution—it’s a strategic shift that could define its future in the premium smartphone market—building its own HarmonyOS, Huawei aims to solidify consumer loyalty and attract users from rival platforms.

Hence, the August 2023 launch of the Mate 60 Pro was a turning point. The device became a symbol of the intensifying tech rivalry between the U.S. and China while rekindling interest in Huawei’s high-end smartphones.

According to Canalys, Huawei’s share of the Chinese premium phone market (devices costing over $600) surged from 11% in Q3 2022 to 33% in the same period this year. Meanwhile, Apple’s dominance in the segment shrank from 72% to 52%.

Huawei’s HarmonyOS, initially introduced in 2019 as an Android-compatible system, has evolved into a fully independent platform. This “Android divorce” represents a remarkable achievement in self-reliance, driven by U.S. export restrictions that cut Huawei off from key suppliers like Google.

The company has mobilized major Chinese tech players to create compatible apps, with plans to grow the HarmonyOS ecosystem to include 100,000 applications within a year. Eric Xu, Huawei’s rotating chairman, highlighted the importance of widespread adoption, saying, “If no one uses it, no matter how advanced the operating system is, it will have no value.”

Building a Competitive Ecosystem

The shift to HarmonyOS is not without challenges though.

Mengmeng Zhang, a senior analyst at Counterpoint Research, noted that while the Mate 70 series is expected to achieve over 10 million shipments, it will take time for Huawei to expand its developer community and build a robust ecosystem to rival Apple’s iOS and Google’s Android.

Despite these hurdles, Huawei’s ambitions are clear. Xu outlined a phased strategy, starting with a focus on the Chinese market before gradually expanding globally.

The Last Bit

Huawei’s comeback has reshaped the competitive dynamics of the global smartphone market—with its growing market share, innovative offerings, and diversification into emerging sectors, Huawei is not just recovering but redefining the industry.

For Apple and other global players, this signals an era of intensified competition, particularly in key markets like China and India, hence Apple’s pivot towards India is understandable even as its growth story in India evolves and continues to contribute to Apple’s growth.