STOCKHOLM—China overtook the U.S. as the world’s largest smartphone market by volume in the third quarter, according to a report by research firm Strategy Analytics.

Deliveries of smart phones to operators and retailers in China grew 58% in the third quarter from the previous quarter to 24 million units. That surpassed 23 million units delivered to the U.S. market, down 7% from the previous quarter, according to the report.

The surging Chinese demand was fuelled by aggressive subsidies offered by operators of expensive models such as Apple Inc.’s iPhone, as well as the growing availability of low-cost models running Google Inc.’s Android platform, Strategy Analytics said Wednesday.

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