Apple iPhone sales in China fell by a fifth in fourth quarter

The figures in the report showed a 19.9 percent fall in Apple's smartphone shipments in the final quarter of 2018, while Huawei's grew 23.3 percent.

Apple's iPhone shipments during the quarter ending December 2018 were down almost 20% in China, according to a new IDC estimate, providing additional context around why Apple missed its own revenue target by $7 billion during its most important quarter.

United States research company IDC said about 397.7 million units were shipped in China past year, down 10.5 percent from 2017. For the iPhone, revenue dropped 15 percent to $51.98 billion.

Apple's latest iPhone models, which are mostly priced above US$1,000, face a tough challenge from Chinese-brand devices that cost about half or a third less. Smartphones sales dropped to below 100 million units in China in Q4 2018 as the launch of iPhone XR and the promotional efforts of Single's Day shopping festival failed to generate important sales, researchers said. A slowing economy, lengthening replacement times and the iPhone's hefty price tag contributed to the USA giant's decline in China, IDC said.

Apple also has to cope with the rise of Chinese rivals such as Huawei, which is eroding its share of a market once pivotal to driving its growth.

However, Apple declined at about twice that pace. The Chinese slowdown was also the driving factor behind Apple's first revenue outlook cut in nearly two decades. Cook, however, emphasised the long haul, highlighting 19 per cent growth in services revenue, the Bloomberg report said.

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In recent times, many Chinese smartphone makers are adopting a two-brand strategy to cater to different customer segments.

Huawei had briefly trumped Apple to get to the No. 2 spot in the world.

Xiaomi's shipment slump was due to a number of factors including the adjustment of product line and inventory channels, as well as the revamp of internal organisation, said IDC.

Apple missed its own revenue target during the quarter by about $7 billion, and attributed the miss to slow demand in China. But IDC argues blazing-fast phones won't become the standard until 2020, because the rollout of 5G networks is just getting underway.

China's smartphone market does not look bright this year, said Wang Xi, a China analyst at IDC.