IDC: Smartphone growth to be weaker than expected in 2015 amid China slowdown

Research firm IDC said smartphone sales growth in 2015 will be slower than it had expected as sales in China slow down and the market there starts to become more saturated -- and more like mature Western markets.

According to a new forecast from IDC, the research firm now expects global smartphone shipments to grow 10.4 percent in 2015 to 1.436 billion units, lower than its forecast in late May for 11.3 percent year-over-year growth and 1.447 billion unit shipments. IDC said it "expects to see a noticeable slowdown in smartphone shipments in 2015 as China joins North America and Western Europe in a more mature growth pattern."

Other research firms, including Gartner, Strategy Analytics and Juniper Research, have pointed to China as a spot that is the key source of the slowdown in global smartphone demand. Many economic analysts think China's economy is cooling off more significantly than was previously thought.

China, the world's largest smartphone market, "remains the focal point" of the global smartphone market in 2015, "although the results haven't been as positive as in previous years," IDC said.

China accounted for 32.3 percent of all new smartphone shipments in 2014, IDC said, and its remains a significant market for sales, even if they are slowing down. Shipments there are forecast to grow just 1.2 percent year-over-year in 2015, which would be down from 19.7 percent growth in 2014, IDC said. China is expected to remain the largest smartphone market through 2019, but its share of the overall market is expected to drop to 23.1 percent in 2019 as high-growth markets like India continue to expand.

"China clearly remains a very important market. However, the focus will be more on exports than consumption as domestic growth slows significantly," IDC analyst Ryan Reith said in a statement. "India has captured a lot of the attention that China previously received and it's now the market with the most potential upside."

Apple (NASDAQ: AAPL) CEO Tim Cook said yesterday that he has confidence in the company's business in China, especially its iPhone sales, despite investors' fears about slowing economic growth there. Apple has benefited from strong sales of its 4.7-inch iPhone 6 and 5.5-inch iPhone 6 Plus.

IDC thinks phablets, with screens of 5.5 to 5.7 inches, will continue to drive shipment volumes in both emerging and developed markets. "Since Apple finally delivered a larger screen smartphone with the iPhone 6+, the demand for large screened devices among consumers has been at a record high," IDC analyst Anthony Scarsella said.

Scarsella said smartphones featuring display sizes from 5.5 inches to 6 inches are forecast to grow 84 percent in 2015 compared to last year, while phablets overall will make up over 71 percent of shipments by 2019.

Interestingly, IDC said that smartphone manufacturing is starting to shift from China and Vietnam to India. Indeed, earlier this month, Lenovo said it will use contract manufacturer Flex's factory outside the southeastern city of Chennai for its Lenovo and Motorola brands, according to Bloomberg. Earlier this year, Foxconn started making smartphones in India for Chinese smartphone players Xiaomi and OnePlus after the Indian government raised taxes on some foreign-made goods in a bid to boost investment in manufacturing. 

"We've begun to see this move as a means to cut costs and capitalize on financial benefits associated with localized India manufacturing," Reith added. "It is the local vendors like Micromax, Lava, and Intex that will feel the most pressure from international competition within its market."

For more:
- see this IDC release

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