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Generative AI Is Boosting Smartphone Market, According to IDC

AInvestWednesday, Aug 28, 2024 3:40 am ET
1min read

On Tuesday, the International Data Corporation (IDC) raised its forecast for global smartphone shipments for the full year, stating that with the recovery of consumer electronics demand and the attraction of generative artificial intelligence (GenAI) features to more buyers, there will be strong growth in smartphone shipments in the first half of this year.

IDC expects that global shipments in 2024 will grow by 5.8% year-on-year to 1.23 billion units. Previously, IDC's forecast was a 4% increase to 1.21 billion units.

Global smartphone shipments in the first quarter of this year grew by 12% year-on-year, and in the second quarter, they grew by 9% year-on-year, which makes people more optimistic about the prospects for the second half of this year.

IDC wrote in its report: Affordable Android smartphones continue to grow rapidly in emerging markets coming off a difficult two years while premium markets are starting to embrace GenAI smartphones, generating excitement and renewed interest in the industry.

Amid the global economy facing uncertainties and risks, consumer electronics have been in a relatively sluggish market state. IDC's action to raise its expectations indicates that global demand for consumer electronics is beginning to recover. At the same time, the new GenAI features are expected to boost smartphone demand in major markets such as the United States and China.

Although GenAI smartphones are relatively new in the market, premium flagships will continue to adopt GenAI features to help separate them from the pack, said Anthony Scarsella, Research Director of IDC's Global Quarterly Mobile Phone Tracking.

It is worth mentioning that Apple will hold its autumn launch event on September 9 at its headquarters in Cupertino, California, where it is expected to launch new iPhones in an attempt to reverse the slowdown in global sales, with generative artificial intelligence features expected to be a major highlight.

At the developer conference in June this year, Apple officially launched its advanced artificial intelligence system, Apple Intelligence, adding a series of AI features to its operating system.

IDC expects that thanks to Apple Intelligence, the growth trajectory of Apple's iPhone sales will improve in 2025, with an annual growth rate of 4%.

In addition, earlier this month, Google also announced that it will launch a new series of Pixel smartphones deeply integrated with artificial intelligence.

IDC predicts that as more flagship products of mobile phone brands adopt built-in GenAI features, by the end of 2024, GenAI smartphones will surge by 344%, accounting for 18% of the market share.

However, IDC also mentioned in the report: GenAI-capable devices won't come cheap initially, as the average selling price for these GenAI smartphones will be more than double the cost of non-GenAI capable devices, further driving the premiumization trend.

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