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Smartphone share: Apple beats Huawei for No. 2 in 2018

New iPhone models hold off surging Chinese rival in fourth quarter

Huawei and Apple find themselves neck and neck in the global smartphone race, with Huawei's sales on the upswing and Apple's on the wane.   © Reuters

TOKYO -- Apple held off its fast-growing rival Huawei Technologies to remain the world's No. 2 smartphone maker in terms of market share in 2018, according to data released by U.S. research company IDC.

It was a close finish, which surprised analysts who had been expecting the Chinese company to overtake its U.S. rival in a saturated market that is proving difficult for Apple to navigate.

Although Huawei's 2018 shipments increased 33.6%, while Apple's fell 3.2%, IDC said the iPhone maker shipped 200.08 million units, edging out Huawei's 200.06 million shipments.

"Huawei continued to capitalize on strong momentum in some markets with shipments up 43.9% in the quarter ended on Dec. 31 ... [and] up an impressive 33.6% for 2018," IDC said in a statement.

In the second quarter, Huawei shipped more smartphones than its American rival for the first time ever, then repeated the feat in the third quarter

Apple pushed ahead of Huawei's smartphone shipments in the final quarter, when it began selling updated iPhone models. Yet the California company's unit shipments suffered as much as an 11.5% decline from the year-earlier period.

"It's not surprising to us that Apple still could maintain the No. 2 position in the last quarter of last year," said Eddie Han, an analyst at Market Intelligence & Consulting Institute. "Their most important iPhone product launch comes ahead of the holiday season -- the company's peak season."

Han noted that Huawei and No. 1 Samsung Electronics unveil important products in spring and fall to eliminate any obvious peak season.

"Huawei is really catching up very quickly," he said.

For the year, Apple shipped 3.2% fewer iPhones than it did in 2017, IDC data shows. It was the company's first year on year tumble. Huawei's 2018 smartphone shipments grew 33.6%.

Earlier this week, Apple CEO Tim Cook acknowledged that weakening iPhone demand will continue into the current quarter. During an earnings call, Cook said iPhone users are hanging on to the their old handsets for longer periods. Cook said other factors, such as carriers offering fewer subsidy programs, are taking a toll as well. He also blamed macroeconomic uncertainties.

"On the positive side," Luca Maestri, Apple's chief financial officer, said during an earlier earnings call, "we expect that we will continue to grow revenue nicely from the rest of the business which is not iPhone."

Huawei's performance in the smartphone market comes despite increasing pressure from governments around the world. The U.S. is seen to be leading the charge, citing security risks and calling for the company's 5G telecommunications equipment to be banned. These headwinds could end up undermining Huawei's meteoric rise up the smartphone sales ladder.

"We are still watching very closely whether telecom operators and distributors in the developed world could offer less support to Huawei in their smartphone campaign," Han said. "If that is the case, it would be a good opportunity for Samsung and Apple to at least take a breath."

Disregarding the U.S.-China battle, Han said, "Huawei is very likely to secure the No. 2 seat for the full year."

A total of 1.44 billion smartphones were shipped globally in 2018, down 4.1% from the previous year, the second straight year of decline. In China, the world's largest smartphone market, shipments dropped more than 10%, dragged down by the slower upgrade cycle, among other reasons.

Samsung remains the world's top seller of smartphones, though its 2018 shipments fell 8%, to 292 million units. No. 4 Xiaomi and No. 5 Oppo, both of China, were able to escape the downtrend and increase shipments.

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