apple The iPhone is losing market share in China due to a drop in shipments, supply chain analyst Ming-Chi Kuo wrote in a report on Friday. The stock fell 2.4 percent.

“Apple has taken a cautious stance when discussing 2025 iPhone production plans with key suppliers,” wrote Ko, an analyst at TF Securities. Post. He added that despite the expected launch of the new iPhone SE 4, shipments are expected to decline by 6% year-over-year for the first half of 2025.

Kuo expects Apple’s market share to continue to decline, as two of the upcoming iPhones are so thin that they will likely only support eSIM, which the Chinese market does not currently promote.

“Both of these models may face shipping speed challenges unless their design is modified,” he wrote.

Kuo wrote that in December, overall smartphone shipments in China were flat from a year ago, but iPhone shipments fell 10% to 12%.

According to Kuo, there is “no evidence” that Apple Intelligence, the company’s on-device artificial intelligence offering, is driving hardware upgrades or services revenue. He wrote that the feature “hasn’t driven demand for an iPhone alternative,” according to a supply chain survey he conducted, and added that, in his view, the feature’s appeal is “cloud-based A.I. has decreased significantly compared to services, which are growing rapidly in the following months.”

Apple’s estimated iPhone shipments were about 220 million units for 2024 and about 220 million to 225 million for this year, Kuo wrote. That’s “below the market consensus of 240 million or so,” he wrote.

Apple did not immediately respond to CNBC’s request for comment.

Look: Apple has to do something to justify its run-up.