Published 20 May 2025
Smartphones have become China’s largest export, an object lesson in corporate strategy and industrial policy, and a focal point in the US-China technology competition. The recent tariff wars, and the exemptions for smartphones and smartphone components from both sides, show how this modern consumer necessity now represents a convergence of national security, corporate interests, and supply chain economics.
Chinese companies now supply approximately 60% of the world’s smartphones. Leveraging government support, supply chains developed largely for foreign companies, and accepting razor-thin or negative margins, they have gone from nowhere a little over a decade ago to become global innovators and sophisticated competitors. Even so, most Chinese smartphone producers still depend on foreign operating systems and semiconductors. Their position shows what China’s tech sector can and cannot do today, the key role that foreign companies have played in China’s tech rise, and the potential of the combination of China’s industrial policies and dynamic Chinese firms.
Smartphones took off with the introduction of Apple’s iPhone and iOS in 2007 and Google’s Android operating system (AOS) the following year. Apple has kept iOS proprietary while Google has licensed the AOS core for free and charges for its Google Mobile Services (GMS) add-ons. Samsung became the global leader in Android phones and the combined unit share of Apple and Samsung reached 50% of the global market in 2012, with mainland Chinese firms accounting for approximately 10%.1 In 2024, Apple and Samsung each accounted for 18% of the 1.22 billion units shipped globally, while Chinese companies accounted for approximately 60%.2
In the first quarter of 2025, Samsung accounted for 20% of global shipments, Apple for 19%, and Chinese firms nearly all of the remainder.3 In that quarter, Chinese firms had an over 80% share of the Chinese market (by volume), 75% in India, the world’s second-largest market; 54% in all of Asia; 45% in Africa; 25% in Europe; 21% in Latin America; and less than 10% in North America.4 Apple and Samsung were the only two significant non-Chinese smartphone companies.
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What explains the phenomenal rise of the Chinese players? When the iPhone and AOS were introduced, China was already the world’s dominant manufacturer of consumer electronics. Apple and Samsung already had extensive manufacturing operations or contract manufacturers in China, and they ramped up smartphone production in China quickly. Numerous local companies followed and by 2013 there were more than 380 firms engaged in smartphone manufacturing in China.5
The rise of Chinese manufacturers would not have been possible without the availability of the free open-source AOS from Google and advanced chips and chipsets from Qualcomm (US), Nvidia (US), Intel (US), MediaTek (Taiwan), and Samsung (Korea). This allowed the mainland Chinese companies to focus on assembly manufacturing without having to develop and support operating systems or to develop and produce the most advanced components. AOS became the standard for non-iOS phones, hastening the decline of Nokia and RIM, which made phones based on their own operating systems that accounted for a combined 23% of the market in 2012.6 The availability of advanced chips and chipsets turned competition for AOS phones into a manufacturing cost game, which allowed the Chinese mainland companies to outcompete companies like HTC, LG, and Sony which accounted for 12.5% of the market in 2012.7
The Chinese companies have also benefited from a wide array of government industrial policies. China’s smartphone companies have benefited enormously from the "Made in China 2025" program, the "High and New Technology Enterprises" program, government-funded smartphone industrial parks, financial support for overseas operations, training support, and literally hundreds of targeted policies to develop the local semiconductor industry.8 Together, these and other programs have promoted development of smartphone platforms, operating systems and application software, and semiconductors and other key smartphone components. All the major Chinese brands, including Huawei, Xiaomi, Oppo, Vivo, Transsion, and Lenovo, benefit from one or more of these programs.
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The large and increasingly sophisticated China market also contributed by allowing the Chinese companies to build scale at home and then go abroad, first to developing economies and increasingly to developed economies. Finally, the Chinese companies themselves invested heavily in relevant technologies and capabilities that have allowed them to dominate the domestic and international markets in terms of units sold.
The Chinese companies started by focusing on low-priced phones, but several have moved upmarket and compete on features attractive to the Chinese and other customers, mostly recently with AI-enabled phones. Samsung, once the leader in China, has seen its share fall to less than 1% of the China market, while its unit share in India fell from 30% in 2015 to 13% in early 2025 due to the aggressive pricing of Chinese competitors.9
Apple has been insulated from direct competition from Chinese competitors by its proprietary iOS and rapid pace of innovation, but that too is changing. According to one analyst, "In past years, Chinese brands positioned their flagship offerings as complementary alternatives to Apple’s products. But this year [2024], their ambition is impossible to ignore. The new models are designed to compete head-to-head with Apple, with an emphasis on both aesthetics and ecosystem integration."10 The Chinese companies are being helped in their domestic by local (since mid-2024) and central (since January 2025) government subsidies for smartphone purchases with restrictions that favor local companies and exclude most Apple products.11
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The impressive growth of the Chinese smartphone companies appears to be at the expense of profit. It was estimated that Apple and Samsung accounted for 96% of the profits in the global smartphone industry (Apple 72%, Samsung 24%) in 2023,12 leaving just 4% for all the Chinese companies combined, meaning that most were at breakeven or worse. How many would survive without some form of support from China’s banks or government is an open question.
The impact the present trade war will have on smartphone producers is not clear. During the first Trump administration, Apple and US semiconductor companies lobbied for exemptions to US tariffs on smartphone imports from China, but the threat of such tariffs helped precipitate the Phase 1 US-China Trade Agreement signed in January 2020. Apple started to shift some production to India. Chinese companies Xiaomi, Oppo, and Vivo set up production outside of China as well, in part to serve local markets and escape rising costs in China.13 China’s share of global smartphone assembly went by one estimate from 80% in 2020 to around 50% in 2023.14
The company most immediately affected by the present US tariffs is Apple, which indicated tariffs will cost it US$900 million in the second quarter of 2025 (the company’s most recent quarterly revenue was US$95 billion), and which has already announced plans to move assembly of US-bound iPhones out of China by 2026.15 Samsung shifted most assembly out of China by 2020, so is less affected. Chinese brands account for under 10% of the US market, so the impact of US tariffs on them would be small, but they may gain in China if Apple is punished by the Chinese government and/or Chinese consumers for US government actions. China’s tariffs on imports from the US could have a wider impact on the Chinese firms, as most of the Chinese companies use semiconductors from US or Taiwanese producers that use US technology. China quietly rolled back tariffs on semiconductors, components, and equipment imported from the US in late April, presumably to limit the damage to the Chinese industry.16
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Going forward, the absence of Samsung and reduced Apple presence could be a negative for the Chinese smartphone ecosystem, as the two foreign companies have been drivers of smartphone technology and supply chains in China. While Chinese companies have made great strides, it is not guaranteed that they can take up the slack.
More concerning for the Chinese firms is the specter of US sanctions and export controls. Huawei’s share of global smartphone shipments went from 20% to virtually zero after the US imposed sanctions that cut the company off from US technology in 2019, including the GMS portion of the AOS and semiconductors from TSMC, which manufactures for Qualcomm, Nvidia, and others.17 Huawei was able to make a comeback after the Chinese government supported the company’s rapid development programs for local semiconductors and operating systems, which are now touted as sanction breakers. Whether Huawei will be able to keep pace with foreign developments remains to be seen, as its operating system needs to build a dense app network and its chips are considered to lag the quality of those of Nvidia.18 Other Chinese smartphone companies are more dependent on US companies than Huawei and would be hit hard should US and Taiwanese chip makers as well as Google be forced to cut them off from key technologies. It is not clear what approach the Trump administration will take as it promises to overhaul Biden-era technology restrictions.19
China’s smartphone industry shows many of the characteristics of the nation’s development over the last few decades. Foreign companies brought new technology products to China, built-up local supply chains and manufacturing capabilities, and combined them with low wages to create a manufacturing juggernaut. Other foreign companies sold or licensed technologically advanced inputs to Chinese firms who did not have to develop them in-house. The Chinese companies used low prices and a willingness to accept zero or negative profits to expand their share and to drive others from the industry. The Chinese companies have also leveraged their domestic market, the world’s largest and most dynamic, to develop the scale and speed to satisfy rapidly evolving consumer needs. Among foreign companies, only Apple has a significant share of the Chinese market today, and only Apple and Samsung are significant global players. And looking ahead, massive Chinese state support and rapidly developing corporate capabilities are being harnessed to seek independence from foreign technology and companies in a quest for local self-sufficiency and global leadership.
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For China and Chinese smartphone firms, the path is clear: Do everything possible to achieve independence in semiconductor and software production and innovation as soon as possible, while seeking to retain access to foreign technology until independence is achieved. For the US, the path forward is less clear as it faces state-sponsored industrialization in China, formidable US tech giants, and anxious US consumers, in a politically divided democratic nation, where the short-term interests of the tech giants and consumers may differ dramatically from the long-term national interest.
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[1] "Market Share Analysis: Mobile Phones, Worldwide, 4Q12 and 2012," Gartner Research, February 12, 2013, https://www.gartner.com/en/documents/2334916.
[2] "Global smartphone market soared 7% in 2024 as vendors prepare for tricky 2025," Canalys, February 3, 2025, https://www.canalys.com/newsroom/worldwide-smartphone-market-2024.
[3] Adrian Diaconescu, "Full new Q1 2025 smartphone market report confirms Samsung's supremacy over Apple," Phone Arena, April 30, 2025, https://www.phonearena.com/news/samsung-supremacy-over-apple-confirmed-full-new-q1-2025-smartphone-market-report_id169972. Some sources report shipments and others sales, leading to discrepancies in market shares between sources.
[4] StatCounter, "Mobile Vendor Market Share Worldwide and by Region, Mar 2024 - Apr 2025," GlobalStats, April 2025, https://gs.statcounter.com/vendor-market-share/mobile/worldwide.
[5] Shin-Horng Chen and Pei-Chang Wen, "The Evolution of China’s Mobile Phone Industry and Good-Enough Innovation," in Yu Zhou, William Lazonik, and Yifei Sun, China as an Innovation Nation, Oxford University Press, 2016, pp. 261-282, https://doi.org/10.1093/acprof:oso/9780198753568.003.0010.
[6] Gartner, 2013.
[7] Gartner, 2013.
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[11] "China’s subsidy program favors local smartphone brands," Tech in Asia, January 9, 2025, https://www.techinasia.com/news/chinas-subsidy-program-favors-local-smartphone-brands.
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[13] "Labor Costs, Geopolitics, Pandemic, Chinese Mobile Phone Brands Accelerate Deployment of Overseas Production," TrendForce, July 21, 2022, https://www.trendforce.com/news/2022/07/21/labor-costs-geopolitics-pandemic-chinese-mobile-phone-brands-accelerate-deployment-of-overseas-production/.
[14] "The Top 10 Mobile Manufacturing Countries (Updated 2025)," MobilityArena, April 5, 2025, https://mobilityarena.com/top-mobile-manufacturing-countries-in-the-world/.
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[17] T.C. Sottek, "Google pulls Huawei’s Android license, forcing it to use open source version" The Verge, May 19, 2019, https://www.theverge.com/2019/5/19/18631558/google-huawei-android-suspension; Joe McDonald, "Huawei: Smartphone chips running out under US sanctions," AP, August 8, 2020, https://apnews.com/general-news-270e93e985733a4d086c06a01375cea0.
[18] Gareth Corfield, "China makes microchip breakthrough in blow to Biden’s tech sanctions," The Telegraph, September 4, 2023, https://www.telegraph.co.uk/business/2023/09/04/china-microchip-breakthrough-blow-bidens-tech-sanctions/; Juliana Liu and Hassan Tayir, "Huawei’s new homegrown Chinese smartphone takes on Apple and Android," CNN Business, November 26, 2024, https://edition.cnn.com/2024/11/26/tech/china-huawei-harmony-os-mate70-hnk-intl/index.html.
[19] Karen Freifeld and Arsheeya Bajwa, "Trump administration to rescind and replace Biden-era global AI chip export curbs," Reuters, May 7, 2025, https://www.reuters.com/business/trump-administration-will-rescind-biden-era-ai-chip-export-curbs-bloomberg-news-2025-05-07/.
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Michael Enright is a leading expert on international competitiveness, regional economic development, and international business strategy.
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