The relentless smartphone growth in the Asia-Pacific region is set to slow dramatically in 2015. Asia-Pacific’s growth is set to drop from 43% in 2013 to 17% in 2014 and then to just 10 % in 2015, largely driven as ever by China, according to market intelligence firm ABI Research (

“A key driver of China’s predicted slower growth is China Mobile’s announcement in mid-2014 that it will be cutting handset subsidies by US$2 billion over the next three years,” says ABI Research Senior Practice Director Nick Spencer. “China Unicom and China Telecom quickly followed with their own cost-cutting plans. This is in response to the state-owned Assets Supervision and Administration Commission directive to carriers to cut costs on subsidies and marketing.”

Given China’s position as the largest smartphone market and supplier, a reduction in subsidy will accelerate the move in smartphone volume from high-end (US$400+) to mid and low (sub-US$200) tiers, placing further pressure on high-end vendors such as HTC, Samsung, Sony, HTC, and even Apple.

“China’s OEMs [original equipment manufacturers] will start to look outside of China to sustain its growth plans. We have already seen the likes of Xiaomi and Lenovo make ambitious moves outside of China; expect others to follow,” adds Spencer.

What’s more, the overall growth of the handset market and indeed the smartphone market is beginning to slow, as it moves into the less affluent demographics. These demographic groups are clearly cost constrained and also typically have a much longer handset life cycle, which is nearer to 4 years than the 2 years in advanced markets.

“As one might expect, this is leading to a shift in smartphone ASPs [average selling prices]. The sub-US$200 smartphone tier will see growth of 14% from 2014 to 2019, whereas the US$400+ tier will see growth of only 5%, but still growth nonetheless,” says Spencer.