Recent findings from Canalys indicate that continuing sanctions imposed by the United States government are negatively affecting Huawei’s performance and contributing to a decrease in smartphone shipments throughout China, where the company currently holds the largest market share.

According to Canalys’ analysis, Apple experienced its strongest performance in China during the final quarter of 2020, driven by strong sales of the iPhone 11 and iPhone 12 models. The company’s full-year shipment numbers matched those of 2018, and it achieved its highest quarterly shipments in China since the launch of the iPhone 6s in late 2015.

In 2020, overall smartphone shipments in China declined by 11%, totaling approximately 330 million units. This market contraction was largely due to Huawei’s difficulties in shipping new devices. Despite sustained consumer demand for Huawei products within China, the company has faced significant challenges stemming from U.S. government sanctions enacted during the Trump administration, which restricted its access to American businesses and severely limited its ability to obtain essential chip components.

Guo Ping, Huawei’s rotating chairman, stated in May 2020 that while the company possesses the capability to design certain semiconductor components, such as integrated circuits, it lacks the resources to handle a broader range of development tasks.

This inability to fulfill device demand has created opportunities for Huawei’s primary competitors, as noted by Nicole Peng, Canalys vice president of mobility. “Oppo, Vivo, and Xiaomi are actively competing to secure Huawei’s network of offline channel partners throughout the country, including those in smaller, rural areas, supported by substantial investments in store expansion and marketing initiatives. These efforts yielded quick results, leading to improvements in market share within a matter of months.”

Apple’s gains are linked to Huawei’s struggles, as the Mate series represents the iPhone’s main competition in the high-end smartphone segment. Only 4 million Mate units were shipped during the fourth quarter. Canalys research analyst Amber Liu explained, “Apple has maintained robust marketing efforts for the iPhone 12.” Aggressive online promotions through various e-commerce platforms, combined with accessible trade-in programs and interest-free payment options with leading banks, contributed to Apple’s exceptional results.

Smartphone shipments in mainland China decreased by 4% year-over-year in the fourth quarter of 2020, reaching a total of 84 million units. While Huawei retained the top position in terms of shipments, its market share significantly decreased from 41% to 22% compared to the previous year. The company shipped 18.8 million smartphones, including those from its budget brand, Honor, which it sold in November.

Conversely, Huawei’s competitors all experienced increased shipments at the close of 2020. Oppo secured the second position, shipping 17.2 million smartphones, a 23% increase year-over-year. Vivo, Oppo’s closest competitor, increased its quarterly shipments to 15.7 million units. Apple shipped over 15.3 million units, raising its market share to 18% from 15% a year prior. Xiaomi completed the top five vendors, shipping 12.2 million units, a 52% year-over-year increase.

Peng suggests that Huawei’s sale of the Honor brand could lead to rapid market share gains for Honor in 2021, given its existing brand recognition. Furthermore, the expansion of 5G technology is anticipated to boost smartphone shipments in China, particularly for higher-end models.