The news: The smartphone market picked back up in 2024 after two years of declines.

• Global smartphone sales grew 4% YoY after 2023’s slowest year in a decade, per Counterpoint Research.
• Samsung again led shipments with 19% market share, down from 20% in 2023. Apple immediately followed with 18% market share.

AI inside: Artificial intelligence and generative AI (genAI) are a natural next step for smartphone manufacturers.

• On-device AI pushed demand for Samsung’s Galaxy S24 family of phones in 2024.
• Although Apple remains a giant in the smartphone industry, short-term iPhone 16 adoption was slowed by the lack of Apple Intelligence tools at launch.

Samsung isn’t betting solely on phones—it’s also pushing out AI features on its best-selling connected TVs (CTVs).

On-device surge: By 2028, nine out of 10 smartphones over $250 will be genAI-capable, per Counterpoint Research.

• On-device genAI is currently limited to premium models for the most part, but Counterpoint expects mid-tier smartphone models to start supporting genAI this year.
• GenAI-capable smartphones will represent 54% of all smartphone shipments in 2028, up from 19% last year.

Software synergy: Smartphone manufacturers are going beyond building AI support into their hardware—they’re also embedding AI into phones’ underlying operating systems.

• iPhones and Google Pixels both feature AI assistants that manage on-device AI to help complete user queries quickly.
• Those underlying processing units can handle features such as text suggestions in real time without sending commands out to a cloud server.

Our take: The recovery in smartphone shipments is a win for manufacturers, but AI on board might not be enough to keep up sales growth—AI integrations are a motivating factor to upgrade devices for only 18% of smartphone users, per CNET.

AI features will soon become an expected offering for phones, rather than a perk, which could be detrimental for companies that fall behind in development.

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