Two of the worlds leading market intelligence firms report that the iPhone has lost its place as the best-selling phone in China, dropping from 1st to 3rd place in the final quarter of last year.Increased competition from local brands is cited as one factor, the second being Apples inability to offer AI features in the country Canalys report last weekCanalys was first to report on Apples changing fortunes in China.Canalysreports that iPhone shipments in China fell by 25% year-on-year in the final quarter of the year.That means Apples market share fell from a chart-topping 19% in 2023 to joint-third with Oppo and Honor in 2024, each with a 15% share.Counterpoint corroboratesWhile the exact estimates differ, Counterpoint Research now reaches the same conclusion.Huawei took the top spot, followed by Xiaomi and Apple [] In Q4 2024, Huawei climbed to the top spot with an 18.1% share. This is the first time since the US ban that Huawei regained the leading position []Xiaomi secured the second spot in Q4 2024 with a 17.2% market share, driven by strong growth from Q3 into Q4. This growth was fueled by the popularity of its flagship Mi 15 series, launched in October. Xiaomi has made significant progress in premiumization this year []Amid intensifying market competition from Huawei and other Chinese OEMs expanding into the premium market, Apple ranked third during the quarter, capturing a 17.1% market share.AI features a significant factorWhile smartphones from Chinese brands now have AI features, Apple Intelligence is not yet available in the country. Apple wanted to be able to use its own generative AI model there, but the Chinese government essentially said that wouldnt be permitted.The government last month said that launching Apple Intelligence in China would bea difficult and long processunless the iPhone maker partners with a local AI company. Working with a Chinese company would instead be simple and straightforward.Apple is believed to be negotiating with Tencent and ByteDance, but with nothing to show for it as yet.Photo byChristian LueonUnsplashAdd 9to5Mac to your Google News feed. FTC: We use income earning auto affiliate links. More.Youre reading 9to5Mac experts who break news about Apple and its surrounding ecosystem, day after day. Be sure to check out our homepage for all the latest news, and follow 9to5Mac on Twitter, Facebook, and LinkedIn to stay in the loop. Dont know where to start? Check out our exclusive stories, reviews, how-tos, and subscribe to our YouTube channel