In China, domestic smartphone brands have overtaken Apple as the top vendors, pushing the tech giant out of the top 5.

• In the second quarter, Apple's market share in China decreased to 14%, compared to 15% in the first quarter and 16% the previous year.
• According to Canalys research analyst Lucas Zhong, this is the first quarter in history where domestic vendors hold all the top five positions.
• In the next 12 months, the localization of Apple's Intelligence services in mainland China will be crucial, according to Canalys, as Chinese brands are increasingly integrating generative AI into their products.

In the second quarter, Huawei's intensifying competition from domestic brands led to the removal of the company from the top five smartphone vendors' list in China, according to a Canalys report.

In the second quarter, Apple's market share in China decreased to 14%, according to a report released Thursday, down from 15% in the first quarter and 16% in the same period the previous year.

In the second quarter of last year, the iPhone maker was the third-largest smartphone vendor, but dropped to the sixth spot with approximately 9.7 million shipments in the same quarter this year, according to CNBC calculations.

According to Lucas Zhong, research analyst at Canalys, this is the first quarter in history where domestic vendors hold all the top five positions.

Since the first quarter, Apple's shipments have been declining, dropping 25% year on year to 10 million units.

Zhong stated that the Chinese vendors' strategies for high-end products and their deep collaboration with local supply chains are starting to pay off in hardware and software features. Honor's latest Magic V3, which leverages GenAI, has significantly enhanced the user experience of foldable devices.

As Apple tries to maintain stable retail prices and safeguard the profits of its channel partners in the Chinese market, it is encountering a "bottleneck," according to the company's CEO.

The incorporation of generative AI into Chinese brands' products is driving the need for localization of Apple Intelligence services in China within the next 12 months, according to Canalys.

Chinese brands dominate

During the "618" e-commerce festival, Vivo regained the top spot in the market with a 19% market share and 13.1 million units shipped, thanks to strong sales both online and offline.

The Reno 12 series helped Oppo maintain its second place in the market with 11.3 million units sold, while Honor, a Huawei spinoff, came in third with 10.7 million units shipped, marking a 4% year-on-year increase.

Despite not being in the top five a year earlier, Huawei came fourth with 15% market share and 10.6 million shipment units. However, its consumer business has seen a resurgence in China after the launch of its Mate 60 smartphone.

Xiaomi's first electric car, the SU7, helped it take the fifth spot in sales, while its K70 and flagship 14 series also contributed to solid sales, according to Canalys.

In the second quarter, the Chinese smartphone market experienced a 10% increase in yearly growth, with shipments surpassing 70 million units, according to Canalys.