Apple Just Lost its Chinese Smartphone Crown

Apple has hit a road bump in its quest to dominate the Chinese smartphone market, according to data tracking the shipment of phones in the second quarter.

Over the period from April to June, Fortune’s leading startup unicorn Xiaomi regained its label as the largest smartphone vendor in China by capturing a 15.9% market share, according to numbers compiled by research firm Canalys. Right behind was Huawei with a 15.7% share, and with an impressive 48% quarter-on-quarter growth, makes the company the fastest growing phone manufacturer in the top ten.

Apple came in third place, representing a drop from its top perch for the first three months of 2015. Analysts at the firm, however, aren’t as pessimistic as the numbers would indicate. Apple is coming off a record-breaking first quarter of sales in greater China — which includes Hong Kong and Taiwan — where they reaped $16.8 billion on a 71% increase from the previous year, and the iPhone 6 and iPhone 6 Plus have yet to be replaced by their newer iterations. Those phones are expected to be launched next month.

“Competition among major brands has never been so intense. Huawei recorded the highest smartphone shipments in its history without compromising its product margin or profitability. Apple and Samsung have both increased their sales activities in the China market, expanding rapidly in channel coverage through flagship stores and small to medium size phone retailers respectively,” Jingwen Wang, an analyst at Canalys, said in a statement.

The bigger worry is for Samsung, which continues to lose ground in the key China market. Xiaomi and Huawei’s offering of cheap yet high-quality phones are proving hard to beat — one in three smartphones sold in the second quarter were from these two companies. With Xiaomi set to launch its latest Mi5 phone, coupled with Huawei’s new flagship Ascend P8, Samsung has its work cut out for it in China.

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