UBS Warns: Smartphone Replacement Cycle Extends to 2.6 Years, Industry Faces Low Growth

UBS has issued a warning that the smartphone replacement cycle has extended to 2.6 years, indicating that the smartphone industry may face several years of low growth. The bank's survey, which covered 7,500 consumers across five countries, revealed that the intention to purchase a smartphone in the next 12 months has decreased from 39% in the fourth quarter of last year to 36%. This decline is particularly notable in the U.S. market, where the long-term purchase intention has plummeted from 50% to 37%, below last year's 44%.

UBS analyst David Vogt highlighted that the sharp decline in long-term purchase intentions in the U.S. is particularly concerning. Consumers in the U.S. may have already released demand in anticipation of potential new tariffs. Meanwhile, consumers are increasingly delaying their phone upgrades. The "expected replacement cycle," or the duration consumers plan to keep their phones before upgrading, has extended from 29.7 months to 31.1 months, or approximately 2.59 years.

In this overall market cooling, Apple is feeling the chill most directly. The survey showed that the share of iPhone purchase intentions for the next 12 months has dropped from 18% to 14%. In the key U.S. market, this decline is even more severe, falling from 24% to 17%. In contrast, Apple's main competitor, Samsung, has maintained a stable purchase intention of around 9%.

Analysts have long bet that generative AI would act as a catalyst to accelerate consumer upgrades, but UBS's survey data has poured cold water on this optimistic outlook. While interest in smartphones with generative AI capabilities has slightly increased from 16% to 19%, this is far from enough to create a so-called "supercycle." This weak interest is unevenly distributed globally: China's market has a high enthusiasm for AI phones at 78%, while the U.S. market's interest is only 8%, almost negligible. Japan even shows a negative net interest.

More importantly, only 34% of respondents globally said they would "purchase earlier or pay extra for AI features." This clearly indicates that, at least for now, AI feature smartphones have not become a key factor in driving consumer spending. Despite the weak demand, the report also revealed an interesting pricing paradox. Among those who said they might buy a phone in the next 12 months, 82% said they would accept some degree of price increase if smartphone manufacturers decided to raise prices to offset the cost pressure from tariffs on the bill of materials (BoM).

However, this does not change the overall picture. Considering all factors, UBS has a pessimistic outlook for the market in the coming years. The report predicts that global smartphone shipments will achieve only about 1% year-on-year growth in 2025, and will stagnate in 2026. As David Vogt emphasized at the end of the report, "We believe that investors expect smartphone shipments to grow only marginally in the coming years." For Apple and the entire industry, this is clearly not good news. The growth story is over, and a new challenging phase has arrived.