China's smartphone sales fell 4% year over year in the first nine weeks of 2026, according to Counterpoint Research's China Weekly Smartphone Sell-Out Tracker. The decline reflects soft consumer demand and underwhelming Lunar New Year promotions.

Government subsidies introduced early in the year have had limited impact so far. While February promotions lifted sales from January levels, rising memory prices constrained discounts. As a result, sales during the holiday period and the preceding three weeks were still down 2% year over year.

Rising Memory Costs Drive Pricing Pressure

Higher memory costs are increasingly being passed through the supply chain. In response, OPPO and vivo have announced price increases for select existing models, effective March. The move also serves as a test of market sensitivity ahead of upcoming launches and will help guide pricing for next-generation devices. If demand weakens further, adjustments are expected.

Apple And Huawei Positioned To Gain Share

Apple Inc. (NASDAQ:AAPL) posted the strongest growth in the period, with sales rising 23% year over year, supported by e-commerce discounts and government subsidies for the base iPhone 17. With tighter supply chain control, Apple is better positioned to manage the current memory cost surge. Unlike Android peers, the company is unlikely to raise prices, opting instead to absorb some margin pressure to protect and potentially expand market share.

Huawei may also benefit. Its reliance on domestic suppliers offers a cost advantage, as local memory sourcing is typically cheaper than international alternatives. This positions Huawei to capture share, particularly in the low- to mid-end segment.

Outlook: Pressure To Continue Through Midyear

Looking ahead, China's smartphone market is expected to remain under pressure from March through May. A potential recovery could emerge in early June, driven by 618 shopping promotions. However, elevated memory prices are likely to persist throughout 2026, forcing OEMs to balance margins, pricing and shipment targets.

AAPL Price Action: Apple shares were up 0.52% at $251.25 during premarket trading on Thursday, according to Benzinga Pro data.

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