Despite recent warnings of a prolonged slump in the mobile sector, Goldman Sachs and Morgan Stanley are forecasting a revival in smartphone sales starting in 2024.
Morgan Stanley's report suggests a nearly 4% rebound in global smartphone shipments in 2024 and a 4.4% rise in 2025.
The catalyst for this turnaround? The burgeoning field of on-device artificial intelligence (AI). Morgan Stanley has increased its projections for 2025 worldwide phone volumes due to the potential of edge AI. This technology could enable advancements from improved photography to speech recognition while maintaining user privacy.
Major smartphone manufacturers, including Apple, Vivo, Xiaomi, and Samsung, have already begun to capitalise on AI's potential. Vivo's new X100 with on-device AI has seen explosive sales, while Xiaomi's AI-packed flagship experienced six times the usual volume. Samsung plans to incorporate built-in generative AI in its 2024 models, offering ChatGPT-style features processed directly on phones, not the cloud.
Morgan Stanley's report also addresses the concern over the lack of a visible 'killer app', suggesting that the emergence of Microsoft's CoPilot as a potential PC AI killer app could lay the groundwork for a similar breakthrough in the smartphone sector.
Goldman Sachs predicts a 5% year-on-year dip in global smartphone volumes in 2023, followed by a 3% rise in 2024 and a further 5% increase in 2025. These optimistic projections are attributed to new product launches and the continuous restocking during the holiday season.
This positive outlook contrasts with the consensus view that maturing smartphones face similar threats as personal computers over the last decade. However, Morgan Stanley argues that replacement cycles and expanding use cases still favour mobile phones, with edge AI set to unlock a new wave of innovation.
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