Here's a fun fact about the smartphone business: sometimes the best way to win is when everyone else is losing. That's the story playing out in China right now, where the overall market is shrinking but a couple of key players are quietly gaining ground.

According to Counterpoint Research's China Weekly Smartphone Sell-Out Tracker, smartphone sales in China fell 4% year-over-year in the first nine weeks of 2026. Consumer demand is soft, and those big Lunar New Year promotions you might expect? They were pretty underwhelming. Government subsidies tried to help early in the year, but they haven't moved the needle much. Promotions in February did lift sales from January's levels, but rising memory prices put a hard limit on how deep the discounts could go. The result? Sales during the holiday period and the three weeks before it were still down 2% compared to last year.

The Memory Squeeze Is Real

So, what's with the memory prices? They're going up, and that cost is being passed right through the supply chain. In response, Android heavyweights OPPO and vivo have done something unusual: they've announced they're raising prices on some of their existing models, starting in March.

Think about that for a second. In a down market, they're raising prices. It's partly a test—a way to see just how sensitive the market is before they launch their next-generation devices. If demand weakens further, they'll adjust. But for now, they're trying to see what they can get away with as their own costs climb.

Apple's Playbook: Absorb, Don't Raise

While Android players are testing price hikes, Apple Inc. (AAPL) is taking a different path. Apple posted the strongest growth in the period, with sales jumping 23% year-over-year. How? E-commerce discounts and government subsidies on the base iPhone 17 helped.

But here's the strategic part: Apple has tighter control over its supply chain. That means it's in a better position to manage this memory cost surge. Unlike its Android peers, Apple is unlikely to raise prices. Instead, the playbook seems to be to absorb some of the margin pressure. The goal? Protect, and potentially even expand, market share while competitors are forced to make their phones more expensive. It's a classic long-game move.

Huawei's Home-Field Advantage

And then there's Huawei. Its secret weapon? Geography. Huawei relies heavily on domestic suppliers in China, and local memory sourcing is typically cheaper than importing it. That built-in cost advantage positions Huawei perfectly to capture share, especially in the crucial low-to-mid-end segment of the market. When costs are rising for everyone, having a cheaper source for a key component is a massive edge.

The Road Ahead: More Pressure, Then Maybe a Break

So, what's next? The pressure on China's smartphone market is expected to continue from March right through May. The first real chance for a recovery might come in early June, driven by the massive 618 shopping promotions.

But here's the kicker: those elevated memory prices are likely to stick around for all of 2026. That means phone makers will be walking a tightrope all year, constantly trying to balance their profit margins, the prices they set, and their shipment targets. It's a brutal environment, but as Apple and Huawei are showing, it's also an environment where smart strategy can turn a market downturn into a share gain.

In a related market move, Apple shares were up 0.52% at $251.25 during premarket trading on Thursday, according to market data.