Samsung has overtaken Apple as the world’s biggest phone seller

Read time: 5m 32s

What happened?

Apple has lost its number one spot as the world’s biggest phone seller to Samsung. The main reason for this, is due to a steep sales drop in China.

According to research firm, IDC, Samsung won a 20.8% market share in the first quarter of 2024, overtaking Apple’s 17.3% share.

More on the story

IDC also revealed that Apple shipped 50.1mn iPhones in the first three months of 2024, but this was smaller than the 55.4mn units it shipped in the same period in 2023.

The drop in sales is the biggest since the Covid-19 lockdowns caused supply chain disruption in 2022.

This comes after global smartphone shipments actually increased to 289.4mn units during the first three months of the year, an increase of 8%.

Apple: A quick glance

What? A multinational technology company.

Current founder/s: Steve Jobs, Steve Wozniak, Ronald Wayne

Current CEO: Tim Cook

Current share price: $165 (at the time of writing)

Check out my previous write-up on Reddit's long-awaited listing on the New York Stock Exchange

What factors have led to this?

A slowdown of sales in China. Although China is not Apple’s biggest market (the US is), it is still the second-largest contributor to Apple’s profits. According to Investing.com, Europe and China bought in around 93.1bn of profit in 2022. China is becoming an increasingly important factor when it comes to the performance of Apple. A related reason for lowered sales in China, is due to growing competition. I go in more detail about this next point below.
More and more competition. Both Apple and Samsung have been feeling the heat, due to stiff competition from local rivals, such as Huawei and Xiaomi. Xiaomi, which is China's top smartphone marker, sliced the third position, with a market share of 14.1% during the first three months of the year. Samsung also launched its latest high-end S24 models at the beginning of 2024, which helped the company to boost its sales. What is also interesting, is that Samsung is betting heavily on AI features, such as automatic phone call translation to promote their newest range. Apple has yet to inform the world and investors of its own AI potential and capabilities. However, we may not have to wait too long-they may spill the beans during a developer conference in June 2024.
Chinese legislation has a role to play. In 2023, China’s government made the decision to ban devices made by foreign companies in workplaces, and yes, this includes Apple devices too. The ban on the use of Apple products could be a sign that China is trying to decrease its dependence on technology that comes from the US and it soured geopolitical tensions between the two nations even further. With less foreign made devices being used across central government, local government and state-owned companies and their employees, this move has given local smartphone makers a boost in sales.

What implications could this story have?

For Apple: Of course this news isn’t a positive one. They will want to try their best to boost sales in the country, but with fierce competition, this could prove to be tricky.

For Samsung: I’m sure they’re happy they’ve taken the number one spot again. Samsung had been the biggest seller of mobile devices for 12 years, up until Apple took the spot toward the end of 2023. Their new smartphone range has helped to boost sales for the company thus far, and I’m sure they’ll continue to invest heavily into their marketing department.

For the broader smartphone market: Not much. Compared to other companies, Apple still has the majority of the global market share by a huge mile. However, were the smaller competitors to merge (that’s if it’d even be approved by regulators), then it could cause some unease for Apple. However, I don’t see this happening in the near future.

The US vs China

You may be wondering why I’ve included this subheading. Apple is an American company, and one of their biggest markets is in China. The drama that has been going on between the two nations for quite some time now. Both are powerful countries- and both want to be the leaders in important sectors, such as AI.

Last year, the Chinese government made the decision to ban devices made by foreign companies. Given that China is an important market for Apple, the decision came as a blow for the company.

However, let’s think more broadly a little. Apple is currently making a move to diversify its supply chain away from China. There is an increasing focus on India right now. Less supply chains in China, mean less Chinese involvement, and China is actually trying to do the same thing (as I stated above with deciding to ban foreign made devices in the workplace). What I find interesting as I watch this trend play out, is that the two countries are actually more intertwined than we think. The US is China’s top exporter for many goods, such as soybeans, crude oil and motor cars and vehicles.

Wanting to conduct more services outside of each other’s countries and protect national markets in certain areas, isn’t a bad thing. If a full ‘decouple’ does happen however, then it could actually cause more damage than good.

The Magnificent Seven

These are seven tech companies that perform relatively well among their competitors. This includes: Apple, Microsoft, Amazon, Nvidia, Meta, Tesla and Alphabet.

Tech stocks did very well last year, however, some of these stocks haven’t been performing as well this year. Let’s look at Tesla as an example. Tesla has suffered a somewhat surprising fall in sales since the beginning of the year. They recorded a 9% fall in deliveries for the first quarter, news which wasn’t welcomed by shareholders. With their recent announcement to cut around 10% of its global workforce, such performances and announcements doesn’t do well to ease the worry that investors have about the company.

As for Apple, they have been doing okay. Apple relies on China for 18% of its revenues, while this figure sits at 23% for Tesla. Naturally, investors are a bit skittish due to Apple’s current reliance on China and the issues that this has brought with it. Apple is making moves to reduce their exposure to China, which could do a decent job of calming some nerves, however, more can be done. For example, the recent additions to the iPhone family over the past few years hasn’t really given people the wow factor. People seem to want to stick with their older iPhones as they see no point of getting an updated iPhone (in name, colour etc) that has nothing new to it. If Apple can add new and unique features to future iPhones, then it could be a way to draw more people to the brand, especially given the fact that iPhone sales make up the bulk of Apple’s revenue.

Final thoughts

Although the recent news is a bad blow to Apple, not everything is all doom and gloom. For example, at the top end of the global smartphone market, Apple is still the dominant player. According to this recent article by The Guardian, Apple’s market value was $2.7tn (£2.16tn) on Friday, a figure that is much further ahead compared to other smartphone makers.

Samsung is a great company, but I won’t be surprised if Apple take the number one spot again in the near future.

That’s it for this week!

What are your thoughts on this story? Do you think Apple will end up being number one again? Why/why not? What other implications could this story have? I’d love to know your thoughts, comment below, message me on any of my social media platforms or send me an email: hello@parahinsights.com. I look forward to hearing from you!

Until next time, remember to stay curious!

Further resources:

‘Apple loses mantle as world’s biggest phone seller to Samsung as China sales drop’- Article by The Guardian

‘Tech stocks- are the ’Magnificent 7’ stocks worth investing in?’ Article by MoneyWeek

‘Tesla to cut 10% of global workforce’- Article by the FT

DISCLAIMER:

This blog is for informational purposes only. Parah Insights is not associated with the news sources in this blog, and sharing does not equal endorsement. Parah Insights does not provide financial, tax, legal or accounting advice – always consult your financial and legal advisors to determine what’s right for you and your business.