Data from research firm IDC on Thursday (January 25) showed they were down 2.1% in the final quarter of last year from the same period a year ago.

Apple was hurt by a growing challenge from local rivals led by Huawei.

The drop shows the challenges facing the U.S. firm in its third-biggest market.

Some Chinese companies and government agencies have limited employee use of Apple devices.

A similar measure was taken by U.S. authorities regarding Chinese apps over security concerns.

Huawei's smartphone business was hit hard by U.S. sanctions, but made a comeback last year with new launches.

Thursday's data showed its shipments rose 36% over the last quarter.

There was some good news for Apple, though, as it became the top seller in China for the first time.

The firm overtook Vivo to become the leading smartphone seller in 2023, with a 17% market share.

IDC said Apple still attracted demand from consumers through promotions via third-party distribution channels.

Earlier this month, it offered rare discounts on iPhones, cutting retail prices in China by as much as $70.

Analysts predicted earlier that Apple's shipment volumes would keep falling by double digits this year.

While Huawei is seen grabbing more market share.

They estimate Huawei will ship around 64 million smartphones worldwide - close to double the figure expected for 2023.