Apple is losing market share in China due to declining iPhone shipments, supply chain analyst Ming-Chi Kuo wrote in a report on Friday. The stock lost 2.4%.

“Apple has taken a cautious stance when discussing 2025 iPhone production plans with key suppliers,” Kuo, an analyst at TF Securities, wrote in the post. He added that despite the expected launch of the new iPhone SE 4, shipments in the first half of 2025 are expected to decline 6% year-on-year.

Kuo expects Apple’s market share to continue to decline as two of its upcoming iPhones are so thin that they will likely only support eSIM, which is currently not encouraged in the Chinese market.

“These two models could have problems with shipping dynamics if their design is not changed,” he wrote.

Kuo wrote that in December, overall smartphone shipments in China were stagnant compared to a year ago, but iPhone shipments fell 10% to 12%.

Kuo said there is also “no evidence” that Apple Intelligence, the company’s on-device artificial intelligence offering, is pushing hardware upgrades or service revenue. According to a supply chain survey he conducted, he wrote that the feature “has not increased demand for iPhone replacement products,” adding that he believes the feature’s appeal “compared to cloud-based AI services, which have developed rapidly, has declined significantly”. following months.”

Apple’s estimated iPhone shipments are about 220 million units in 2024 and about 220 million to 225 million this year, Kuo wrote. That was “below the market consensus of 240 million or more,” he wrote.

Apple did not immediately respond to CNBC’s request for comment.

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