Apple’s AI disappoints as iPhone sales drop

Multiple research firms say Apple Inc. saw its iPhone sales fall by about 5% globally in the final quarter of last year. Apple’s artificial intelligence software, called Apple Intelligence, failed to stir up strong demand, especially in China, bringing on the decline.

According to a recent report, the iPhone’s worldwide market share dropped one point to 18% in 2024. China’s competitors, led by Xiaomi Corp. and Vivo, gained market share at the expense of both Apple and rival Samsung Electronics Co. Apple’s full-year iPhone sales dropped 2% even as the wider market grew 4% globally in the same period.

This view was reinforced by quarterly data from International Data Corp. Apple shipped 4.1% fewer smartphones than it did in the fourth quarter, while the total industry grew 2.4%, according to IDC.

“This past quarter was particularly remarkable for the largest Chinese smartphone vendors,” IDC analyst Francisco Jeronimo said. He further added, “They achieved a historic milestone as they shipped the highest combined volume ever in a quarter, representing 56% of the global smartphone shipments.”

Apple AI suite is currently not available in China

Apple Intelligence is unavailable in China and, therefore, not very attractive to local buyers. The suite, which was unveiled alongside the iPhone 16 in September, is being rolled out in stages. The company is now seeking local partners to help deliver AI writing and image generation features in its biggest market outside the US and Europe in China. 

“The response to Apple’s iPhone 16 series was a mixed bag, and partly because Apple Intelligence was not available at launch,” Counterpoint director Tarun Pathak stated.

Apple’s shares fell as much as 3% to $229.72 in New York on Monday, in step with a broader market slide. Though fewer units were sold in China, more customers chose to buy Apple’s expensive Pro and Pro Max models. More than half of all iPhone shipments in the country were these higher-end phones.

Chinese smartphone makers are also building their own AI tools and agents capable of doing things for users that might make it more difficult for Apple to be doing AI.

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