Soaring Smartphone Prices Kill Upgrade Demand In China

China's smartphone market weakened during the 2026 May Day holiday as rising memory costs pushed up handset prices, while Huawei strengthened its lead and Apple Inc. (NASDAQ:AAPL) navigated a more compAetitive upgrade cycle, according to Counterpoint Research. Rising Component Costs Pressure Smartphone Demand Counterpoint Research noted on Tuesday that China's smartphone sales dropped 16% year over year during the two weeks surrounding the May Day holiday, largely because higher memory prices increased smartphone costs and reduced consumer upgrade demand. The research firm also noted that smartphone makers pulled back on aggressive promotions compared with previous years, prioritizing profitability over sales volume. Counterpoint added that Chinese Android brands raised prices on legacy models by an average of 13% due to mounting component costs, which could continue weighing on demand in the near term. However, the firm expects a modest recovery in early June, driven by 618 shopping promotions. Huawei Extends Market Leadership Counterpoint Research said Huawei maintained its leadership position in China's smartphone market, supported by strong demand for the Enjoy 90 Pro Max, which gained traction because of its battery life and value-focused positioning. The research firm added that Huawei sustained weekly market share above 25% since April through stable pricing and solid sales of the Pura 90 Pro lineup and foldable Pura X Max. Counterpoint also said that Huawei continued to offer promotions on older Nova 15 and Mate 80 models. At the same time, competitors raised prices, highlighting the company's domestic supply-chain advantage and helping it capture additional market share. Apple Holds Ground Amid Competitive Pressure Counterpoint Research said Apple posted 3% year-over-year growth during the holiday period despite facing stronger competition from Chinese smartphone launches in April. The firm said the iPhone 17 lineup entered a more normalized demand phase after a strong six-month run. However, Apple still benefited from domestic brands raising prices because of memory cost inflation. Counterpoint added that entry-level subsidies also helped Apple remain competitive in China during the quarter. AAPL Price Action: Apple shares were down 0.50% at $296.35 during premarket trading on Tuesday. The stock is approaching its 52-week high of $303.20, according to Benzinga Pro data. Photo via Shutterstock