TL;DR:
- Global smartphone shipments dropped 12% in 2022 due to stagnation in consumer demand.
- Phonemakers are turning to generative AI for innovation and sales growth.
- Samsung aims to dominate with on-device AI tech, planning a ‘most powerful AI phone.’
- Apple, Google, and Chinese rivals are also pursuing generative AI integration.
- Generative AI can trigger smartphone upgrade cycles, according to industry experts.
- Google monetizes generative AI with Pixel 8 series, capitalizing on Android space.
- Chinese phonemakers like Xiaomi, Vivo, Oppo, and Realme are already integrating generative AI.
- Hardware improvements from Samsung, Qualcomm, and MediaTek driving AI capabilities.
- Generative AI adoption may initially target premium smartphones, potentially reshaping the market.
Main AI News:
In 2022, global smartphone shipments experienced a notable decline of 12%, marking the lowest figures in a decade. This downturn primarily stemmed from reduced consumer demand, with an increasing number of users refraining from upgrading their devices. The rationale behind this hesitance lies in the perceived lack of substantial differentiation between current smartphone models and their predecessors, despite the inclusion of advanced features like enhanced cameras and processors.
To reinvigorate sales and pave the way for the next wave of innovation in the smartphone industry, phonemakers are redirecting their focus toward generative AI. At the recent Samsung AI Forum, the South Korean manufacturing giant unveiled an on-device AI technology that seamlessly integrates Gauss, its generative AI models, into various smart devices.
Nonetheless, Samsung’s ambitions extend beyond the mere integration of generative AI into its devices. The company has set its sights on introducing the “most powerful AI phone” to date, a move that promises to disrupt the smartphone market significantly.
By incorporating genAI capabilities across its entire product range, Samsung aims to secure a substantial share of the market. However, formidable competition awaits in the form of industry giants like Apple, Google, and Chinese smartphone manufacturers.
Phonemakers have now identified generative AI as a potential game-changer to boost sales. According to Alex Katouzian, Senior Vice President and General Manager of Qualcomm’s mobile, compute, and XR division, generative AI stands as the most likely catalyst for driving smartphone upgrade cycles.
The race to introduce generative AI features into smartphones is intensifying. Apple, a dominant force in the industry, is actively working on incorporating a plethora of generative AI features into iOS 18, which is expected to be released in 2024. This effort signifies a significant shift in Apple’s strategy, driven in part by the genAI revolution ignited by OpenAI’s ChatGPT.
Apple’s agenda includes substantial enhancements to Siri, its voice assistant feature, through the integration of generative AI. Additionally, Apple is exploring the incorporation of AI features into its first-party apps, potentially revolutionizing services like Apple Music and introducing auto-generated playlists akin to Spotify. Notably, applications such as Pages and Keynote are also in line for substantial AI upgrades.
Moreover, Apple is evaluating various approaches to implement generative AI, considering options like a comprehensive on-device experience, a cloud-based model, or a hybrid fusion of both.
Meanwhile, Google, while currently trailing in the AI arms race, is aggressively monetizing generative AI in the smartphone market. The recent release of the Pixel 8 series, equipped with genAI features such as magic editing, call assistance, audio enhancement, and photo restoration, demonstrates Google’s commitment to capitalizing on this technology.
Bindu Reddy, CEO of abacus.ai, stated that the search business is waning, but Google can find growth opportunities in the Android space, where generative AI holds promise.
Chinese phonemakers have also emerged as formidable players in the smartphone arena over the past few years. Many of them were quick to embrace generative AI technology. Xiaomi, for instance, commands around 11% of the global smartphone market and has already integrated various generative AI capabilities into its devices, such as the Xiaomi 14, powered by the Snapdragon 8 Gen 3 SoC, capable of running a locally hosted AI model with 1.3 billion parameters.
Xiaomi’s founder and CEO, Lei Jun, disclosed the integration of generative AI capabilities into the company’s digital assistant, Xiao Ai, in August. Similarly, Vivo recently launched the X100 smartphone, featuring a 7 billion parameter language model and a 1 billion parameter vision model, both processed locally on the device. Other Chinese phonemakers like Oppo and Realme are also following suit.
The hardware front is witnessing significant strides as well. Samsung introduced the Exynos 2400 processor, featuring AMD’s latest RDNA3-based Xclipse 940 GPU. This chip boasts a remarkable 1.7x increase in CPU performance and a staggering 14.7x boost in AI performance compared to the Exynos 2200. Reports suggest that this processor will debut on the Samsung Galaxy S24 and S24+ models, both equipped with generative AI capabilities.
Notably, companies like Qualcomm and MediaTek are making substantial contributions to the hardware landscape. Qualcomm’s Snapdragon processors power many of the world’s most popular Android phones, with the Snapdragon 8 Gen 3 already driving Xiaomi’s 14 series. Recently, Qualcomm unveiled the Snapdragon X Elite, which is capable of running generative AI models with over 13 billion parameters on-device, solidifying Qualcomm’s position as an AI leader with 4.5 times faster AI processing power than competitors.
In a similar vein, MediaTek launched the Dimensity 8300 chipset, featuring full generative AI support thanks to the integrated APU 780 AI processor. This chipset unlocks new possibilities for premium smartphones, delivering in-hand AI capabilities, hyper-realistic entertainment experiences, and seamless connectivity without compromising efficiency.
The competition among phonemakers and their efforts in hardware development suggest that generative AI capabilities may initially be limited to premium smartphones. Samsung’s success will hinge on its ability to swiftly bring generative AI across its smartphone portfolio, encompassing all price segments.
Conclusion:
The smartphone market is witnessing a significant shift with the integration of generative AI. Phonemakers are racing to leverage this technology to rekindle consumer interest and drive sales. Samsung’s ambitious plans, alongside the efforts of industry giants like Apple and Google, indicate a new era of smartphone innovation. Chinese phonemakers are also aggressively adopting generative AI, intensifying competition. Hardware advancements further underscore the market’s transformation, potentially democratizing generative AI in smartphones and reshaping the industry landscape.
