The market intelligence firm IDC has cut its forecast for global smartphone sales this year, due to the economic slowdown in China. It now expects annual growth of 10.4 percent to shipments of 1.44 billion smartphones, down from its previous forecast of 11.3 percent growth in 2015. However, the steady fall in prices will help keep volumes healthy for several years to come, with global shipments expected to reach 1.9 billion units in 2019. Growth in China is expected to slow to just 1.2 percent this year from 19.7 percent in 2014, as the market matures in line with the pattern seen in many Western countries. China is expected to still remain the largest market for smartphone volumes throughout IDC’s forecast period, but its share will fall to an estimated 23.1 percent in 2019 as other markets like India continue to expand.

Tarifica’s Take

The crash of the Chinese stock market, inevitably, will have a major impact on the smartphone market and, indeed, on the worldwide market for mobile telecom services. China is the world’s largest smartphone market, accounting for almost one third of units sold last year, so it is no surprise that an economic contraction in that country will cause a noticeable slowdown in global smartphone sales. IDC’s forecast, however, is influenced by concurrent but unrelated factors, such as the maturation—and therefore saturation—of the Chinese smartphone market, and the rise of other large-population markets in the developing world. Beyond that, we expect that the Chinese financial crisis is serious enough to affect China’s own smartphone and mobile technology sector, which has been changing the face of the telecom world for past several years by providing relatively inexpensive mobile devices, as well as network infrastructure, to developing countries. Companies such as Huawei, which have partnered with many international operators, will no doubt have to restrict their investments somewhat in the coming months or even years. And the effect of that restriction will reverberate around the world, perhaps creating opportunities for competitors in other countries.