Apple's Greater China revenue surged 38% year-over-year in Q1 FY2026 (ended December 27, 2025), ending 18 months of decline. The company captured 22% of China's smartphone market in Q4 2025, shipping 28% more units than the prior year even as the overall market contracted 1.6%.
The turnaround wasn't about superior technology. Huawei, Xiaomi, and Vivo all ship devices with more sophisticated cameras and AI capabilities. Apple Intelligence isn't even available in mainland China yet. The baseline iPhone 17 won by being competitively priced and timed to exploit Beijing's 43 billion dollar electronics subsidy program.
Apple listed the iPhone 17 at 5,999 RMB in China (roughly $860), one yuan below the 6,000 RMB threshold for government subsidies worth up to 15%. That pricing made the device eligible for discounts while the standard model included features previously reserved for Pro variants. According to Counterpoint Research, the baseline iPhone 17 represented about 20% of Apple's China shipments, a shift from typical launch patterns where Pro models dominate.
The revenue spike also reflects upgrade cycles: iPhone 13 buyers from 2021-2022 hit the three-to-four-year replacement window. CEO Tim Cook reported record iPhone upgrades among Chinese customers and double-digit growth in Android switchers during the analyst call.
Enterprise implications: This matters for procurement teams tracking device standardization in APAC. Chinese enterprises weighing iPhone deployments now face suppliers with restored inventory levels after supply constraints hit Huawei and smaller brands harder during Q4 2025. However, Apple's reliance on memory chip supply chains and geopolitical friction remain risks worth monitoring.
Domestic brands aren't losing ground overall. IDC notes premium Android flagships from Xiaomi, Vivo, and Oppo showed "more notable growth" in Pro/Max variants during the same period. The China smartphone market remains competitive, the subsidy program expires eventually, and Apple's pricing strategy has limited room to move lower.
What changed: Apple stopped trying to out-feature Huawei and started competing on price positioning. In a contracting market, that was enough.