Apple has "misinterpreted the demand" in China and needs to lower the price of its iPhones to compete, an analyst told CNBC, suggesting Samsung is better-placed to deal with changes in the smartphone market.
The U.S. technology giant has struggled in China, in spite of singing up with the biggest domestic carrier China Mobile in 2014. The tech giant's second-quarter revenues fell 26 percent year-on-year in the region. Apple has been challenged by a revival of interest in Samsung's premium devices, a big push from Huawei in the high-end smartphone space and smaller players such as OPPO creating low-cost but high-spec devices.
Globally, three of the top five smartphone vendors are Chinese.
Peter Garnry, equity strategist at Saxo Bank, suggests investors go long Samsung and short Apple.
"We are going to see more commoditization of this industry where consumers will be more sensitive to price and not features and the premium status which has been the key features for the iPhone so far. So if you look at the challenges in Asia, it's quite clear that Apple misinterpreted the demand and there is excess inventories now of iPhones," Garnry told CNBC.
He said that local Chinese device makers were offering products that are 40 percent cheaper than Apple but "on-par" in terms of quality.