Apple opens research centre in Shenzhen, China, aiming to make it biggest such facility outside US amidst tough local competition

Apple has opened its largest research and development lab outside the United States in the Chinese tech hub of Shenzhen, as it seeks to bolster its position in the world’s largest smartphone market amidst fierce domestic competition.

The facility began operations last Thursday at Shenzhen Park in Hetao, the state-operated People’s Daily newspaper reported.

The Hetao Shenzhen-Hong Kong Science and Technology Innovation Cooperation Zone, covering about 3.89 square kilometres, is located in an area where Shenzhen meets with the northern zone of Hong Kong and was developed by the central government to foster tech partnerships between the two cities.

Apple said in March it planned to build a new lab in Shenzhen to boost its testing and research capabilities for flagship products such as the iPhone, the iPad and the Vision Pro headset, as well as strengthening collaboration with local suppliers, the South China Morning Post reported.

Regional hub

The new facility, which spans 20,000 square metres in its initial phase, is intended to become Apple’s research hub for the Greater Bay Area, which includes Hong Kong, Macau and nine major cities in Guangdong province, including Shenzhen.

The lab is to employ more than 1,000 local and international staff and is planned to be Apple’s “most extensive” lab outside the US, the report said.

Apple has been diversifying its supply chain into areas including India and Vietnam following disruption sparked by the Covid-19 pandemic.

But the region remains its biggest market after the Americas and Europe.

In March Apple said it had set up labs in Beijing, Shanghai, Suzhou and Shenzhen and that its research and development staff in China had doubled in the past five years.

The investments come at a time when Apple is facing increasingly stiff competition from domestic smartphone makers including Huawei, which has begun producing high-end smartphones with domestically produced 5G chips and processors after being sanctioned by the US in 2019.

In August Huawei sold more handsets in mainland China than Apple for the first time in nearly four years, research firm CINNO reported last week.

Competition

Government research group China Academy of Information and Communications Technology found foreign smartphone shipments declined 12.7 percent year-on-year in the same month.

In July Canalys found Apple had dropped out of the top five in the mainland China smartphone market in the second quarter, following local smartphone brands, even as the market grew 10 percent year-on-year, with shipments exceeding 70 million units.

iPhone shipments fell by 6.7 percent during the quarter, Canalys found.

The company’s total shipments in China for the quarter ended in June stood at 9.7 million units, down from 10.4 million units in the same quarter last year, Canalys data showed.

The company fell to sixth place in China with a market share of 14 percent, down from 16 percent a year ago, Canalys said.

Earlier this year Counterpoint Research found that in the first quarter Apple’s iPhone sales in China fell 19 percent, with Huawei showing a 69.7 percent surge in smartphone sales in the country during the same period.