In response to the rapid rise of AI phones, Market Intelligence & Consulting Institute (MIC) indicates that the Android camp is actively engaged in self-developed large language models (LLMs) and operating systems (OS). However, current limitations include constraints on smartphone space, chip design complexity, and memory specifications, restricting AI phones to deploying models with a scale of only 10 billion parameters. Industry analyst Wayne Hsu suggests that to achieve higher-tier generative AI requirements such as image generation and understanding, smartphones must surpass the 10 billion parameter scale, necessitating higher computational power and memory capacity, such as 40 TOPS of computing power and memory capacity of 24-30GB. It is expected that hardware specification upgrades and AI acceleration deployments will be the focus of AI phone development in the near future. Central processing unit (CPU) development trends towards increasing the number of large cores, while AI framework platforms and development toolkits (SDKs) are optimized and updated, all serving as key aspects of hardware upgrades.
In 2024, the penetration rate of AI phones is estimated to be 10.6%. All eyes will be on whether Apple introduces generative AI in the iPhone 16 series this year. As smartphone brands make advancements, there is an expected rise in the adoption of generative AI in mid-range smartphones after 2025. This development is forecasted to significantly boost AI phone shipments. MIC predicts global AI phone shipment volume will top around 540 million units, with a penetration rate of 42%.
Global AI Phone and Smartphone Shipment Volume, 2023-2027
Source: MIC, April 2024
Wayne states that considering user demands, energy consumption, and deployment costs, major smartphone brands predominantly adopt cross-terminal collaboration between terminal and cloud AI. Based on user generative AI task scenarios, effective coordination of terminal and cloud resources is employed to maximize efficiency. To seize market opportunities, some smartphone brands strategically collaborate with cloud and AI giants, leveraging their key technologies and AI accomplishments to help brands meet target market demands, enhance AI phone competitiveness, expedite smartphone launches, and reduce model development costs. There are already instances of LLM applications suitable for cloud and terminal AI. Wayne suggests that generative AI will gradually become a standard feature of smartphones, generating service differentiation based on price and specifications, and potentially introducing new business models. As generative AI service subscriptions become mainstream, AI smartphones may evolve towards subscription-based models, offering opportunities for smartphone brands to explore new revenue streams.
About Market Intelligence & Consulting Institute (MIC):
Established in 1987, Market Intelligence & Consulting Institute (MIC) is a division of III (Institute for Information Industry), a major government think tank, and one of the leading IT research institutes in Taiwan. MIC specializes in industry and market research. With over three decades of experience, MIC provides valuable insights and data-driven recommendations to assist businesses in making informed decisions.
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