IDC’s Updated Smartphone Outlook Supports These Portfolio Holdings
AI adoption and foldables are expected to take share over the coming years.
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Today brought a few pieces of information on the smartphone market. Some of it was not so good, but we’d argue that was offset by a more positive outlook ahead, especially for Apple AAPL.
We continue to think the iPhone upgrade cycle will be an extended one that accelerates as Cupertino brings more Apple Intelligence features to the device via forthcoming iOS updates in 2025 and into 2026. The litmus test for that will be the upcoming public debut of iOS 18.2, which is expected around December 9. Odds are it will have limited impact in the current quarter, but paired with lucrative trade-in values it could foster a better 2025 for new iPhone models.
Now let’s get to what was revealed today. We’ll start with the no-so-good news. In October, sales of foreign-branded smartphones fell 44.25% year over year to 6.22 million units. Because Apple is one of the larger non-China smartphone vendors, this means it took it on the chin in China during October. Parsing the data furnished by the China Academy of Information and Communications Technology (CAICT), overall smartphone sales in China during the month rose 18% to 29.67 million units, which suggests share gains by the Android ecosystem and is a positive for shares of Qualcomm QCOM.
The better news was the updated 2024 smartphone forecast from IDC, which now sees the industry shipping about 1.24 billion smartphone units worldwide this year, up 6.2% year over year. Compared to the almost 877 million smartphones sold during the first nine months of this year, that forecast pegs current quarter shipments near 373 million units, up more than 14% year over year and 18% compared to Q3 2024. The bulk of that growth is expected by IDC to come from the Android ecosystem, which suggests Qualcomm’s smartphone comments last week skew conservative.
IDC expects iPhone sales to re-accelerate next year, growing 3.1% compared to 1.7% for the Android market. Much like we do, IDC thinks more investments are needed to increase consumer awareness and introduce a "must have" feature that will rush consumers to the store and create that super cycle that everyone is waiting for. Longer-term, IDC suspects AI smartphones will account for ~70% of the market by 2028.
Those are favorable data points for TheStreet Pro Portfolio’s holdings in Apple and Qualcomm, but also for Universal Display OLED. There’s also another data point we find confirming for OLED shares: IDC sees the foldable smartphones segment growing double-digits through 2028, a far faster rate than the overall smartphone market. With 2025 CES almost around the corner, we’ll be paying close attention to 2025 smartphone models, especially ones with AI and/or foldable screens.
At the time of publication, TheStreet pro Portfolio was long AAPL, QCOM, and OLED.
