Two research reports published this week showed Apple (AAPL) slipping to third place, behind Chinese brands of Android handsets.

Smartphone sales in China fell 14% in the first quarter as volumes fell “near levels seen in the severe pandemic-affected first quarter of 2020,” Counterpoint Research said in a statement. report Thursday.

Apple (AAPL)Sales fell 23% in the three months ending March, compared to the previous quarter, Counterpoint Research added. The company has grown rapidly in China over the past year, right after the release of the iPhone 13.

Its market share in China now stands at 17.9%, compared to 21.7% in the quarter ended December.

A Canalys report on Friday also showed that Apple had slipped from market leader in China to third place, with its first-quarter shipments down 36% from the previous quarter. Canalys tracks manufacturer shipments to retail outlets, rather than consumer sales.

Ivan Lam, principal analyst at Counterpoint Research, attributed Apple’s decline in part to economic downturn in China which has “affected the money in people’s pockets”.

Local Chinese brands – including Vivo, Honor and Oppo – fared better than Apple as their sales rebounded after suffering from strong iPhone 13 performance in the last quarter of 2021, Lam added.

Overall, a seasonal drop in demand and high economic uncertainty weighed on the market in the first months of this year.

“I don’t think the second quarter data will improve much as the ongoing lockdowns will continue to affect consumers’ willingness to spend,” Lam told CNN Business.

Full or partial lockdowns are currently in place in at least 27 cities across China, affecting up to 165 million people, according to CNN calculations. Shanghai – the country’s main financial center and a major manufacturing hub – has been in lockdown for more than a month. The restrictions forced many businesses to close and dealt a severe blow to economic activity.

The Chinese economy has slowed sharply over the past two months. Retail sales contracted in March for the first time in more than a year. Unemployment, meanwhile, hit a record 6% in 31 major cities.

“These factors, combined with the downward trend in demand already visible in the Chinese smartphone market before the new pandemic wave, have had a significant impact on the sector,” said Mengmeng Zhang, research analyst for Counterpoint Research, in the report accompanying the publication of the data.

She expects smartphone demand in China to remain “disappointing” due to weak consumer sentiment and a lack of new innovations to boost consumers.

Apple warns of serious supply headwinds in China
It’s not just weak demand that’s hurting Apple in China. The company is also facing supply chain issues resulting from lockdowns in China. Foxconn, a major supplier to Apple, halted production at its Shenzhen factory for a few days last month as the city imposed a Covid lockdown. Pegatron, an iPhone assembler, also suspended operations at its Shanghai and Kunshan factories earlier this month.

CEO Tim Cook said on an earnings call on Thursday that China’s growing Covid restrictions, along with industry-wide silicon shortages, would impact the market by $4 billion to $8 billion. company’s next quarter.

“Supply chain issues continue to be a headwind in China and this will weigh on growth in the June quarter,” said Dan Ives, analyst at Wedbush Securities.

Earlier this month, Canalys warned that smartphone vendors around the world faced great uncertainty due to continued lockdowns in China, the Russian-Ukrainian war and the threat of inflation.

— Samantha Murphy Kelly contributed to this report.