The 'smartphone effect' is weakening

The smartphone cycle and firmer Chinese growth were among reasons Asia defied predictions deflation

The rush to upgrade smartphones may be ebbing, prompting economists to dial back the outlook for Asian exporters.

Early indications, including signs of disappointing orders, point to a mixed reaction to the latest iPhones, hurting the share prices of Apple Inc.’s Asia-based suppliers. Given that smartphone improvements help power demand for electronics components from supply-chain powerhouses such as South Korea, Japan and Taiwan, a weaker upgrade cycle would have macro-economic implications too.

The weakening “smartphone effect” is not the only reason economists are sensing a peak in this year’s better-than-expected trade performance in Asia. Other threats include forecasts that China’s economy is