Smartphone players such as Huawei, Apple Inc. (NASDAQ:AAPL), OPPO, vivo, HONOR, and Xiaomi Corp. (OTC:XIACY) (OTC:XIACF) are navigating a challenging market, as Counterpoint Research highlights shifting performance and cost pressures across China's smartphone industry.

Shipments Decline As Costs Rise

Counterpoint Research reported on Friday that China's smartphone shipments fell 4% year-over-year in the first quarter of 2026, driven by weak demand, a high base from last year's subsidies, and rising component costs.

Senior analyst Ivan Lam said higher memory prices limited the impact of promotions and pushed up retail prices for both existing and new devices.

He added that elevated costs are expected to keep the market under pressure through the second quarter, even as premium segments remain relatively resilient due to innovation in features such as foldables and AI capabilities.

Huawei Leads While Apple Gains Share

Huawei captured the top position with a 20% market share, supported by improved supply of its Mate 80 series, government subsidies, and its reliance on domestic suppliers, which helped cushion cost pressures.

Apple climbed to second place, driven by strong iPhone 17 series demand, promotional pricing, and subsidies, while also delivering the fastest growth among the top six brands with shipments rising 20% Y/Y.

Counterpoint noted that Apple is best positioned to navigate the memory crunch due to its premium portfolio and supply chain strength, allowing it to absorb costs and potentially expand market share.

OEM Strategies Diverge Under Margin Pressure

OPPO ranked third after its realme integration, but its profit-first strategy—including price hikes on older models—has weighed on demand.

vivo posted modest 2% growth, supported by strong low- to mid-range models, while HONOR maintained momentum with key models and new launches such as the Magic V6.

Xiaomi, however, saw shipments drop 35% Y/Y due to the weaker performance of core models and a cautious pricing approach amid rising costs.

Counterpoint added that OEMs now face a "double hit" of declining shipments and tightening margins, with memory costs expected to remain high through 2026.

As brands balance pricing and volumes, China's smartphone market is projected to decline 9% for the full year, though it is still expected to outperform global trends.

AAPL Price Action: Apple shares were up 0.58% at $264.92 during premarket trading on Friday, according to Benzinga Pro data.

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