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Apple slashes iPhone prices in China for the second time this year as local competition pressures its sales

CFOTO/Future Publishing via Getty Images

Apple just launched another round of discounts in China, an out-of-character move for the company as it tries to maintain its position in the world’s second-largest economy.

Apple started a new round of discounts on Chinese e-commerce platforms like JD.com and Alibaba's Tmall on Monday, slashing prices of the newest iPhone 15 model by over 20%, according to state-run Global Times. Discounts reached as high as 2,300 yuan ($138) on Tmall, Reuters reports. The promotion runs until May 28.

It’s Apple’s second round of discounts this year. In January, Apple offered a 500 yuan ($69) discount on its official website in China over a three-day period just before the Lunar New Year. Third-party resellers have also offered discounts on the iPhone 15.

Analysts say that Apple's discounts are necessary to preserve the company's market position in the country

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"Apple's second price cut in China this year is a strategic move to defend its share in the premium segment," says Ivan Lam, a senior analyst at Counterpoint Research. He suggests that Apple is trading hardware revenue in the short-term for a long-term increase in "service-related revenue."

And Monday's discount might not be Apple's last in China. "Apple is riding the value-seeking trend in China,” said Will Wong, senior research manager for the Client Devices Group at IDC Asia-Pacific. “Chinese consumers are well-informed about price discounts...so it’ll be hard for Apple not to offer similar incentives in the future."

Apple’s China revenue dropped by 8% year-on-year in the first quarter of 2024, though CEO Tim Cook claimed on the company’s earnings call that iPhone sales in China grew over that time period, without providing specifics. Cook also said the iPhone 15 and 15 Pro Max were the two bestselling phones in "urban China".

Greater China—a grouping that includes mainland China, Hong Kong, and Taiwan—represented 19% of Apple's total 2023 revenue, making it the third-largest region by sales.

That datapoint contrasts with a steady drumbeat of independent analysis showing Apple struggling to hold onto its market share. Apple’s sales declined by 19.1% year-on-year in the first quarter of the year, while Huawei and HONOR’s sales rose by 69.7% and 11.5% respectively, according to data from Counterpoint Research.

Huawei’s sales have been on the rise since it released the Mate 60 Pro series of phones last August. The company released a new range of high-end smartphones, the Pura 70 series, in April. Two models of the Pura 70 series sold out on Huawei’s official online store just a minute after their release, according to Reuters.

Wong suggests that, instead of lowering prices, Apple needs to offer more "wow" factors for Chinese consumers. The company's Android competitors “have brought AI features and foldable form factor to the users to maintain customer stickiness”.

Apple is reportedly talking with companies like Google and China's Baidu to provide AI services for the iPhone. It's also working on a foldable phone, The Information reported in February.

This story was originally featured on Fortune.com