Apple’s iPhone 16 series saw a significant boost in May, thanks to well-timed price cuts ahead of China’s 618 shopping festival, a major e-commerce event. Discounts of up to $351 on platforms like JD.com and Alibaba’s Tmall made the iPhone 16 Pro and Pro Max particularly attractive, with three iPhone models ranking among the top bestsellers during the period. Counterpoint Research noted that these promotions, combined with national subsidy programs, drove a sales spike, even as the broader market grew only slightly year-over-year. The strategy showcased Apple’s understanding of China’s promotional calendar, capitalizing on consumer enthusiasm during key shopping moments.
iPhone 16e Broadens Market Reach
The introduction of the iPhone 16e, a lower-cost model priced at $599, expanded Apple’s appeal to budget-conscious buyers in China’s competitive midrange segment. Launched earlier in 2025, this model offered a compelling feature set compared to the 2022 iPhone SE, driving sales volume and complementing the premium iPhone 16 Pro and Pro Max. This tiered approach allowed Apple to capture demand across price points, from high-end buyers seeking advanced camera systems to cost-sensitive consumers prioritizing value. The iPhone 16e’s performance in its first full month on shelves was particularly strong, landing it among the top-selling smartphones globally in March.
Competing in a Cooling Economy
China’s smartphone market remains challenging, with consumers increasingly cautious due to a slowing economy. Spending during the 618 festival was flat compared to the previous year, reflecting broader hesitancy to splurge on premium goods. Apple faces stiff competition from domestic brands like Huawei, which led the market with a projected 12% sales growth in Q2 2025, as well as Xiaomi, Oppo, and Vivo, which target price-sensitive customers with aggressive pricing and advanced features. Huawei’s resurgence, fueled by locally made chipsets, has intensified pressure on Apple to maintain its premium brand while offering competitive value.
Supply Chain and Subsidy Dynamics
Government subsidies in May played a critical role in bolstering demand, supporting both consumer spending and local production. However, analysts warn that these incentives may taper off later in 2025, potentially exposing weaker underlying demand. Apple has mitigated some risks by diversifying its supply chain, with increased production in India and Vietnam to counter U.S.-China trade tensions and tariffs of up to 145% on Chinese imports. By planning to manufacture most U.S.-bound iPhones in India by 2026, Apple aims to stabilize costs and avoid disruptions, though consumers may still face higher prices or limited inventory during the transition.
Sustaining Momentum Amid Challenges
Apple’s Q2 performance in China demonstrates resilience after years of volatility, including supply chain disruptions from the pandemic and a 17% sales decline in 2024. The company has invested heavily in local manufacturing and expanded its retail footprint to build brand loyalty in a market known for rapidly shifting consumer tastes. However, sustaining this growth will require Apple to balance its premium image with broader market appeal, especially as competitors close the hardware gap with lower-priced alternatives. The absence of Apple Intelligence in China, due to the lack of a local AI partner, remains a hurdle, as rivals leverage AI features to attract buyers.
The iPhone 16’s success in Q2 2025 underscores Apple’s ability to adapt to a complex market. With strategic pricing, a diversified product lineup, and a keen understanding of local dynamics, the company has regained ground in China. As economic and competitive pressures persist, Apple’s next moves—potentially including localized AI features and further supply chain shifts—will be crucial to maintaining its edge.
