Test for new iPhone: Beating Chinese rivals with home-field edge

Apple pulled off a rare feat in China two years ago.

- Stu Woo

The iPhone became the country's best-selling smartphone, surpassing a host of domestic rivals.

But that reign is over—a casualty, in part, of the escalating U.S.-China technology Cold War.

Apple has fallen from first to third in the country, dethroned by two Chinese companies, Vivo and Huawei, that offered similar features at lower costs as China's economy slumped.

Now Apple has a new offering in the world's biggest smartphone market. Deliveries of its iPhone 16e, a cheaper version of its flagship device, will begin in China this week at a starting price of about $600. That makes it eligible for a national stimulus program that gives consumers a subsidy for purchasing smartphones under $800.

The new device gives Apple a chance to get more competitive in China, but its challenges there go beyond the economy.

While Apple's newest offering is aimed at thriftier consumers, its Chinese rivals are becoming more sophisticated. On Tuesday in Kuala Lumpur, Huawei announced an international version of its double-folding Mate XT smartphone. The $3,700 device can transform into a 10-inch tablet, with two creases that are noticeable but not overly pronounced.

There is also a less-visible force at play: The Chinese government is giving local companies a helping hand.