Emerging Market Slump Puts Brake on Global Smartphone Recovery in 2025

TMTPOST -- The global smartphone industry is losing momentum in 2025, with demand softening across key emerging markets despite early-year optimism and AI enhancements on new devices. According to the latest IDC data, smartphone shipments are now forecast to grow just 0.6% this year to 1.24 billion units, a sharp downgrade from February's 2.3% projection.

Macroeconomic headwinds—including inflation, tariff uncertainty, and unemployment—have dampened consumer sentiment worldwide. The sector's traditional growth engines, China, the U.S., and Europe, are increasingly saturated, intensifying competition and narrowing room for expansion. That's pushed global players like Xiaomi, OPPO, vivo, Samsung, and Apple to chase growth in developing markets.

But that strategy is faltering. First-quarter data shows smartphone shipments declined in India, Southeast Asia, and the Middle East—regions that until recently were seen as crucial growth pillars.

"2025 marks the tail end of the post-pandemic device replacement cycle," said Amber Liu, Research Manager at Canalys, which recently merged with Omdia. "Rising costs, inventory adjustments, and macroeconomic uncertainty are making consumers more hesitant."

Canalys data shows India's smartphone shipments dropped 8% year-on-year to 32.4 million units in Q1. Southeast Asia saw a 3% decline—its first contraction since early 2024—while the Middle East slipped 4% to 11.7 million units. IDC noted the Philippines plunged 20.3% due to excess inventory, while Indonesia, Vietnam, and Thailand showed tepid growth.

"Emerging markets have always been defined by large populations, fast economic development, and low smartphone penetration," said IDC's Asia-Pacific Senior Research Manager Huang Zixing. "But when household expenses rise, phones are no longer top priority."

Tariff shifts, such as U.S. duties on Chinese electronics, are another drag. "Brands and distributors are acting cautiously," said Huang. "Even after COVID, the level of risk aversion has only deepened."

Despite short-term weakness, manufacturers are being urged to stay agile—diversifying supply chains, adjusting product strategies, and localizing operations to adapt to volatile conditions.

Still, some segments are holding up. Premium devices priced over $800 continue to grow, showing resilience at the top end. "Even in a flat market, the high-end is expanding," said Liu. "This year's growth opportunities are tied to AI innovation, ecosystem integration, and premium experiences."

This polarization has given rise to a "dumbbell" market structure in emerging economies. On one end are price-sensitive users scaling back; on the other, aspirational consumers still splurging on premium brands.

Apple, in particular, is capitalizing. In the Middle East, devices priced above $600 rose 17% in Q1, with iPhone sales up 10% year-on-year. In India, Apple logged its best-ever first quarter on the back of the iPhone 16 series, boosted by e-commerce deals and deeper penetration into tier-two and tier-three cities.

"There's still strong upgrade demand in the premium space," said Huang. "Apple's brand appeal remains a status symbol."

Thanks to this momentum, Apple grabbed 19% global market share in Q1 2025, the first time it's topped the charts, according to Counterpoint. CEO Tim Cook has emphasized the company's long-term strategy in India and Southeast Asia, with a third Apple Store opening soon in Bangalore.

But as competition intensifies, low-price strategies aren't enough. "AI-driven experiences and value-added services—like subscriptions—are becoming new levers," said one local channel partner.

Last year, Chinese smartphone brands crossed the 50% overseas market share mark. Yet challenges loom. Near-term pressures include softer demand and the need to defend share in competitive markets like India. Longer term, success depends on navigating regulatory risks, refining local operations, and deepening partner alliances.

Regulatory pitfalls are rising. Both vivo and Xiaomi have faced scrutiny in India. In Indonesia, Apple's iPhone 16 faced a sales ban last October for failing to meet local sourcing rules. The government requires 40% of smartphone components to be locally produced.

"Global expansion today is about more than shipping phones," said Huang. "It's a negotiation. Emerging markets need investment, and brands need access. It's a mutual dependency—but one shaped by complex, shifting conditions."

Despite the near-term slump, analysts believe emerging markets will remain the key engine of smartphone growth through 2029—if economic conditions stabilize. Until then, companies will need to shift from pure scale to strategic resilience.

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