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Investing.com - Growth in handset sales is tipped to be "relatively muted" this year due in part to demand headwinds facing Apple (NASDAQ:AAPL)’s iPhone in China, according to analysts at Barclays (LON:BARC).
In a note to clients on Tuesday, the analysts said they are maintaining an earlier estimate for smartphone unit expansion of 2% in the 2025 calendar year. In 2026, the figure is also seen rising "around" a "low single digit" percentage.
Citing checks with Asian companies as well as recent supply chain commentary from smartphone makers and chip manufacturers, the analysts predicted device sales would be "weighted" to the second half of 2025, while the first six months of the year "should be flat to down" on an annualized basis.
A "cautious" outlook for demand of the iPhone 16 -- Apple’s latest iteration of its flagship smartphone -- and uncertainty whether the upcoming next-generation iPhone 17 will "fare any better", the analysts said. Apple has banked on new artificial intelligence features to help boost demand for the products, although a sputtering rollout of these enhancements -- known as Apple Intelligence -- have dented sales.
Last week, executives at the tech giant said the group now expects sales to grow in the low- to mid-single digits in its fiscal second quarter. The guidance surpassed expectations and pointed to momentum in demand for the iPhone, Reuters reported, citing analysts.
The rosier outlook helped to assuage worries around iPhone sales, which dropped marginally and missed estimates in its key holiday shopping quarter, due in part to the firm’s new AI features not being available in some markets.
Sales of the iPhone, which account for nearly half of total revenue, fell to $69.14 billion from $69.70 billion a year earlier, short of estimates of $71.03 billion.
Meanwhile, in the latest sign that competition in China’s smartphone market remains intense, Apple’s sales in Greater China were down 11% to $18.5 billion, well below analyst projections of $21.57 billion.
The analysts at Barclays said they expect China will "remain an area of risk" for Apple as grapples to maintain market share in the country.