Apple to expand applied research labs in Shanghai and Shenzhen as iPhone sales weaken in world’s largest smartphone market

Apple is enlarging its applied research operations in mainland China, as the US technology giant’s iPhone sales slow in the world’s largest smartphone market amid increased competition from Huawei Technologies and other major domestic handset vendors.

Cupertino, California-based Apple plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, the company said in a statement on Tuesday.

The Shenzhen lab is expected to boost Apple’s testing and research capabilities for its major products including the iPhone, iPad and Vision Pro mixed-reality headset, according to the company. The new facility will also serve to strengthen the firm’s collaboration with local suppliers, while providing support to all its employees in the region. The mainland forms part of Apple’s Greater China region, which also covers Hong Kong, Taiwan and Macau.

Apple’s vice-president and managing director of Greater China, Isabel Ge Mahe, said in the statement that the company is “proud” to cultivate deeper ties in China and expand its facilities in the country.

Apple’s latest initiative shows that it remains committed to boosting capital spending in Greater China – the firm’s third-largest geographic market behind the Americas and Europe, based on its December quarter results – in spite of market challenges and recent efforts to diversify its manufacturing supply chain outside the mainland.

That comes after Apple’s iPhone sales on the mainland fell 24 per cent year on year over the first six weeks of 2024, as total smartphone sales in the market declined by 7 per cent in the same period because of increased competition and muted consumer spending, according to a report by Counterpoint Research.

The company “faced stiff competition at the high end [of the market] from a resurgent Huawei, while getting squeezed in the middle on aggressive pricing by the likes of Oppo, Vivo and Xiaomi”, Counterpoint senior analyst Zhang Mengmeng said in the report.