The Zhitong Finance App learned that Canalys published an article stating that in 2024, 16% of global smartphone shipments will be AI phones, and by 2028, this percentage will surge to 54%. Driven by consumer demand for enhanced features such as AI assistants and end-side processing, the AI mobile phone market grew at a compound annual growth rate (CAGR) of 63% between 2023 and 2028. It is expected that this shift will first appear on high-end models and then gradually be adopted by mid-range smartphones, reflecting the trend of endside generative AI penetrating the overall mobile phone market as a more pervasive advanced technology.

1. As technology advances, users' expectations for AI mobile phone experience are also increasing

When defining an AI phone, several core hardware capabilities are critical. Specialized processors, such as ASICs, GPUs, and other components, are optimized to efficiently run end-side AI models and applications. As technology advances, software and service capabilities will play a critical role. The ability to differentiate in the AI mobile phone market requires not only strengthened hardware capabilities, but also the ability to seamlessly integrate and continuously bring more AI features to the market.

2. The AI mobile phone market has grown dramatically

In 2024, 16% of global smartphone shipments are AI phones, and by 2028, this percentage will surge to 54%. Driven by consumer demand for enhanced features such as AI assistants and end-side processing, the AI mobile phone market grew at a compound annual growth rate (CAGR) of 63% between 2023 and 2028. It is expected that this shift will first appear in high-end models and then gradually be adopted by mid-range smartphones, reflecting the trend of endside generative AI penetrating the overall mobile phone market as a more pervasive advanced technology.

3. Industry leaders pioneered the adoption of AI technology

Major global manufacturers such as Apple (AAPL.US), Google, and Samsung, as well as leading Chinese manufacturers such as Honor, OPPO, Xiaomi (01810), and Vivo, are at the forefront of integrating generative AI capabilities into their devices. Their strategies vary, from developing dedicated AI chips to enhancing ecosystem integration using AI to enhance the user experience. These developments are both technical and strategic, and maintain a competitive advantage through significant investment in hardware and software.

4. Expanding AI revenue generation models

Integrate end-side AI to open up new revenue streams for traditional smartphone sales. End-side AI brings new revenue models, including subscription-based services for advanced AI features, personalized advertising, and enhanced application capabilities using end-side processing power. These models diversify revenue streams and deepen customer engagement by providing a personalized user experience that continues to improve.

5. Consumer interest and transparency

The Canalys Consumer AI Propensity Index shows that consumers are increasingly interested in the AI features of smartphones. However, consumer interests are constrained by privacy and data security issues, so transparency and corporate responsibility are critical when designing and implementing AI features. Clearly communicating information about data use, the specific role of AI features, and compliance with privacy regulations is critical to building consumer trust and acceptance. Market participants face up to these issues and address them can help ease user concerns, thereby creating a more inclusive market environment.