Analysts expect smartphone market growth to continue in 2025, but the pace will be slower 'as refresh cycles continue growing and pent-up demand is fulfilled,' according to IDC. AI applications are likely to grow this year as vendors bank on the technology to differentiate their devices.
Global smartphone shipments were up 2.4% year-over-year (YoY) to 331.7 million units in Q4 2024 despite macroeconomic challenges such as inflation and mediocre demand, according to IDC. The research firm said it expects market growth to continue in 2025 but at a slower pace "as refresh cycles continue growing and pent-up demand is fulfilled."
Analysts with Canalys, a sister company to Light Reading, released similar results to IDC, noting that the global smartphone market increased by 3% to reach 330 million units in Q4 2024. Researchers at Canalys echoed IDC's sentiments that it will be difficult to replicate the market growth experienced during 2024 in 2025.
"Last year's growth largely came from inventory replenishment through vendor and channels, and macroeconomic recovery in specific markets. Demand fluctuations and macro uncertainties remain key challenges," said Toby Zhu, senior analyst for Canalys, in a statement.
GenAI on smartphones
This year, the smartphone market is expected to increase by 4.6% to 1.3 billion units shipped, said Gartner analysts in an email to Light Reading. Premium smartphones are estimated to grow 6.3% in 2025 as demand for generative AI (GenAI) capable smartphones rises. The industry will likely see AI applications grow this year as vendors bank on the technology to differentiate their devices.
Last year, many of the major smartphone vendors released their own version of AI technologies in new devices. Apple Intelligence, Google's Gemini AI and Samsung's Galaxy AI were showcased front-and-center as the vendors unveiled their new lineup of devices.
However, Apple has some catching up to do on its AI applications. "As titillating as some of Apple's new features might be, one is left with the nagging concern that Apple actually is meaningfully behind in its AI deployment," wrote analysts with MoffettNathanson after the iPhone 16 release this fall.
Canalys recently told Light Reading that Apple should focus on developing AI features of interest to the local market in China to gain market share in the region. Apple is experiencing smartphone market challenges in China "due to a lack of a proper answer in AI against its competitors," said Canalys analyst Le Xuan Chiew.
Macroeconomic challenges persist
Q4 2024 was the sixth consecutive quarter of smartphone shipment growth, according to IDC. For the full year, smartphone shipments were up 6.4% with 1.24 billion shipments.
"The strong growth witnessed in 2024 proves the resilience of the smartphone market as it occurred despite lingering macro challenges, forex (foreign exchange market) concerns in emerging markets, ongoing inflation, and lukewarm demand," said Nabila Popal, senior research director for Worldwide Client Devices at IDC, in a statement.
Smartphone vendors' promotions, decisions to launch devices in multiple price segments and interest-free financing plans were among the strategies that supported a strong year for smartphone sales, added Popal. However, there are concerns that the incoming Trump administration could issue new (or raise) tariffs that could impact the smartphone market.
Apple and Samsung top the leaderboard
Apple and Samsung continued their reign as the top smartphone vendors for Q4, and 2024 as a whole, but they experienced YoY declines due to growth by Chinese vendors focused on low-end devices and expansion in China, said IDC.
Canalys' Chiew explained that Apple has benefited from growth in emerging markets such as India and Southeast Asia over the past year due to expanded channel coverage plus its marketing and branding strategies. Unfortunately, competition and the fact that users are holding onto their existing devices for longer periods slowed Apple's growth in some developed markets, he added.
"Looking ahead to 2025, Apple is expected to achieve growth, driven by a refreshed portfolio, hardware upgrades and broader adoption of Apple Intelligence," said Chiew.
Consumers could see that "refreshed portfolio" from Apple sooner than later. Apple has been rumored to release the iPhone SE 4 early this year – the device will likely include the A15 Bionic chip, 8GB of RAM and 5G, according to the Hindustan Times. Google plans to release a lower cost Pixel 9a series of smartphones this year as well, according to Forbes.
Xiaomi came in third place with the highest YoY growth of the top five vendors, followed by Transsion and Vivo, which tied for fourth place.
Growth trends for Chinese vendors
"This past quarter was particularly remarkable for the largest Chinese smartphone vendors: Xiaomi, Oppo, Vivo, Honor, Huawei, Lenovo, realme, Transsion, TCL, and ZTE," said Francisco Jeronimo, vice president for EMEA Client Devices for IDC, in a statement. "They achieved a historic milestone as they shipped the highest combined volume ever in a quarter, representing 56% of the global smartphone shipments in Q4."
Those vendors have also had success outside of China and Asia, with their low-end and mid-range devices performing well in Europe and Africa.
"Notably, Huawei stands apart, with most of its shipments in the high-end and premium segments, underscoring its distinct market positioning in China," said Jeronimo.
Looking ahead, 2025 will also be a "critical year for foldable smartphones," explained Runar Bjørhovde, analyst with Canalys, in a recent LinkedIn post. However, foldables only represent 1.5% of the total smartphone market, he added.
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