Smartphone maker Apple Inc (AAPL  ) considers China its second-largest revenue market where there is heightened competition.

What Happened: The smartphone market, which saw a significant 11% decline in global shipments throughout 2022, is showing signs of recovery. In 2023, this decline has tapered to a marginal 0.1% year-on-year drop in the third quarter, the Wall Street Journal reports.

In China, smartphone sales increased by 11% in the first four weeks of October.

Huawei Technologies Co's sales soared by over 90%, and Xiaomi Corp (XIACF  ) (XIACY  ) experienced a 33% increase in the same period.

Huawei's resurgence, especially with its Mate 60 Pro launch, marks a significant rebound from the setbacks caused by U.S. sanctions. Xiaomi is intensifying its push into the premium market segment, challenging Apple's stronghold. Apple, in contrast, experienced a single-digit percentage decrease in sales in China during this period.

About 80% of Xiaomi's smartphone shipments occur outside China. This expansion is coupled with a strategic shift towards higher profit margins and premium products, moving away from its previous focus on volume. This strategic pivot has resulted in a 46% rise in Xiaomi's stock value in 2023.

Why It Matters: China's decision to expand its prohibition on iPhones within key sectors, including government-supported agencies and state-owned enterprises, indicates growing challenges for Apple.

Price Action: AAPL shares traded higher by 0.77% at $191.19 on the last check Monday.