Corrects paragraph 1 to say forecast revised from 2.3%, not from 2.6%

May 29 (Reuters) - International Data Corp slashed its 2025 global smartphone shipment growth forecast to 0.6% from 2.3% on Thursday, citing tariff-driven economic uncertainty and a pullback in consumer spending.

The downgrade signals challenges for manufacturers like Apple, who already face weakening sales amid escalating geopolitical tensions and tariff disputes.

IDC expects growth to remain in low single digits throughout the year, with a five-year (2024-2029) compound annual growth rate $(CAGR)$ of 1.4% due to increasing smartphone penetration, lengthening refresh cycles, and cannibalization from used devices.

Despite geopolitical tensions, the U.S. and China are poised to drive a modest 0.6% growth in smartphone shipments this year.

China's market is projected to expand by 3% year-over-year, bolstered by government subsidies favoring Android devices.

Apple faces a projected 1.9% decline in 2025, challenged by Huawei competition and economic pressures, with many models ineligible for subsidies.

However, upcoming discounts during the 618 shopping festival in China and the iPhone 17 launch, featuring significant hardware upgrades, are expected to stimulate demand.

In response to U.S.-China trade tensions, Apple is expanding its manufacturing in India and Vietnam to diversify production and reduce reliance on China.

However, President Donald Trump stated that Apple would face a 25% tariff on iPhones sold in the U.S. that are not manufactured domestically.

"Despite these headwinds, India and Vietnam are expected to remain the key alternatives to China for smartphone production. However, additional tariffs of 20-30% on US bound smartphones could post a serious downside risk to the current U.S. market outlook,” said Nabila Popal, senior research director with IDC's Worldwide Quarterly Mobile Phone Tracker.

(Reporting by Kritika Lamba in Bengaluru; Editing by Tasim Zahid)

((Kritika.Lamba@thomsonreuters.com;))