Jefferies is pessimistic about the smartphone market outlook but raises Apple's shipment forecast: Strong performance during the "6.18" period is key

According to the Zhitong Finance APP, investment bank Jefferies has lowered its forecast for smartphone sales from 2025 to 2027, as the firm believes the outlook for smartphones has deteriorated for various reasons. The analysts stated in a client report: "The U.S. tariff policy has brought significant uncertainty, but it also drove forward demand in the second quarter of 2025. Given the continued lack of innovation, unclear economic outlook, high Android inventory, and the gradual fading of Chinese subsidies, greater challenges are expected in the second half of the year." As a result, Jefferies has reduced its overall smartphone shipment expectations for 2025 to 2027 by 2% to 4%.

Despite the overall unstable outlook for smartphones, Jefferies has raised its shipment forecast for Apple's (AAPL.US) iPhone by 4%, citing reasons such as forward demand and the extension of discount activities in the Chinese market during the "6.18" period to six weeks (usually five weeks). The analysts noted: "Our industry survey shows that smartphone sales during this year's '6.18' period increased by about 4% year-on-year, lower than last year's approximately 6%." "More importantly, Apple launched smart and highly targeted discounts during '6.18', driving iPhone sales to grow by 19% year-on-year, far exceeding last year's 7%. This also contributed to a sales growth of about 10% in China in the second quarter. Before '6.18', our industry survey indicated that iPhone sales had declined by about 9% year-on-year, but the strong performance during '6.18' kept its year-to-date growth basically flat."

In contrast, the growth of Android devices during China's '6.18' promotion period was minimal, with Android device sales likely declining by 4% year-on-year. The analysts explained: "Given the high Android inventory (about 50 days) before '6.18', we believe that despite significant discounts, sales remained poor, indicating that inventory levels are still high, thus facing price reduction pressure in the second half of the year." "Our industry survey also shows that Android inventory levels in overseas markets are even higher than in China. Therefore, the weak outlook for Android is the main reason for our downward revision of global shipment expectations. We have also lowered our expectations for 5G devices, entirely dragged down by Android."