•    The premium smartphone segment (wholesale price above $600) will drive GenAI smartphone shipments in 2024 and 2025, contributing around 80% of the total volume.
•    GenAI adoption will expand to the high ($400-$599) and mid-to-high ($250-$399) price segments by 2026 and 2027 respectively, with these segments expected to contribute around 30% of the GenAI shipments.
•    Advancements in hardware and software are democratizing GenAI, likely driving adoption to sub-$250 smartphones by 2027-2028.

Seoul, Beijing, Buenos Aires, Hong Kong, London, New Delhi, San Diego, Taipei, Tokyo – October 29, 2024

The smartphone industry is moving towards hyper-personalization driven by Generative AI (GenAI). The impact has been significant within just a year of the first GenAI-capable phone. GenAI smartphone shipments are projected to exceed 730 million units by 2028, more than triple the estimated volume for 2024, according to Counterpoint Research’s AI 360 Service. By 2028, 9 out of 10 smartphones priced above $250 will be GenAI capable, signaling the widespread adoption of GenAI.

The industry is shifting focus from traditional hardware advancements, such as bigger screens, faster processors and more cameras, to offering more intelligent, adaptive and personalized user experiences. Hyper-personalization, which has started with premium smartphones, will eventually extend to high-, mid- and low-end devices as GenAI technology matures. In 2024 and 2025, the premium smartphone segment (wholesale price above $600) is expected to be a major driver of GenAI smartphone shipments, contributing around 80% of the total volume.

While GenAI alone is unlikely to drive immediate upgrades due to a lack of compelling use cases compared to hardware advancements, this is expected to change as the technology evolves. As OEMs continue to refine and promote GenAI capabilities, its appeal will grow. Initially, most of the GenAI adoption will be concentrated in premium smartphones, but by 2026 and 2027, it will expand into the high ($400-$599) and mid-to-high ($250-$399) price segments. The high and mid-to-high segments are expected to contribute around 30% of the GenAI smartphone shipments in 2026 and 2027, largely driven by Chinese brands.

The smartphone industry is accelerating the democratization of GenAI by driving innovations in hardware and software, making the technology more accessible even in lower-priced smartphones. For instance, chipset manufacturers like Qualcomm are introducing GenAI-optimized processors in their mid- and high-end portfolios, while leading companies in the LLM space are developing lighter models with various optimization techniques to ensure high performance.

Smartphone OEMs are actively promoting GenAI to enhance the overall user experience. They have even begun delivering software upgrades for older smartphones to offer a glimpse of GenAI capabilities. This momentum is expected to drive the adoption of GenAI in the sub-$250 segment by 2027 and 2028, further boosting shipment growth.

As GenAI continues to evolve, it will enable more personalized and compelling use cases for smartphones.

Background
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

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