Smartphone sales to rebound on AI gains, Morgan Stanley says

Trending 2 months ago

Smartphone sales will arise a advance starting in 2024, defying growing warnings of a abiding slump above the adaptable sector, according to abstracted projections by Goldman Sachs and Morgan Stanley advised by TechCrunch.

Morgan Stanley’s address predicts all-around smartphone shipments will backlash by about 4% in 2024 and by 4.4% in 2025, shrugging off comparisons to the PC industry’s multi-year downdrafts.

Driving the smartphone turnaround will be new on-device AI capabilities unlocking beginning demand, Morgan Stanley says. The advance case aloft its projections for 2025 common buzz volumes, citation the ample abeyant of alleged bend AI to accredit advances from added photography to accent acceptance while attention user privacy.

Smartphone makers including Apple, Vivo, Xiaomi and Samsung accept already started to accurate their bullishness on AI. Vivo’s new X100 with on-device AI saw atomic sales, while Xiaomi accustomed 6x accepted aggregate for its AI-packed flagship. Samsung affairs complete abundant AI for 2024 models, aiming to action ChatGPT-style appearance candy anon on phones, not the cloud.

“The better pushback is that there is no afterimage on back the ‘killer app’ will be developed. If we booty desktop internet and adaptable internet as examples, the actualization of a new analgesic app usually comes 1-2 years afterwards the antecedent breakthrough,” Morgan Stanley wrote in a address this week.

“While there is no agreement that the analgesic app in Edge AI will chase the aforementioned timetable, the actualization of Microsoft’s CoPilot as the abeyant PC AI analgesic app could set the aboriginal foundation for popularizing AI at the bend (implying AI features/function on the device, not relying on cloud), and advice to accord investors aplomb that a similar, but different, analgesic app for the smartphone will additionally emerge.”

Smartphone bump by Morgan Stanley. India is the alone bazaar slated for a double-digit growth. Chart and data: Morgan Stanley

Goldman Sachs estimates that all-around smartphone volumes in 2023 will end at a 5% y-o-y dip to 1.148 billion units, bottomward from an estimated 1.206 billion phones alien aftermost year. The 2023 abatement would mark a additional beeline anniversary bead afterward abundant steeper avalanche in 2022.

But Goldman said drive will clean in 2024 and 2025, fueled by new artefact launches. It forecasts common smartphone shipments ascent 3% to 1.186 billion in 2024, again aggressive addition 5% to 1.209 billion in 2025.

“With the anniversary division and connected restocking, alternating with bigger advice from the accumulation alternation on a bazaar recovery, we revised up 2023-25E smartphone shipments; however, we abide to apprehend low distinct chiffre advance in 2024-25E, and all-around smartphone addition to gradually get aback to the 2022A akin by 2025E,” Goldman Sachs analysts wrote.

The brightening adaptable angle diverges from accord angle that crumbling smartphones face agnate apathy and barter threats as claimed computers over the aftermost decade. But Morgan Stanley said backup cycles and use cases still favor adaptable phones.

“Tablets and smartphones accept been demography allotment from PCs back 2011. In added words, PC addition declines accept been acquired by the actualization of new devices, not the dematerialization of appeal in general. We do not see smartphones adverse a agnate barter accident from technologies like AR/VR anytime soon. Smartphone backup cycles are beneath because they are acclimated added frequently and accept abate batteries. Use cases for smartphones are still expanding, with Edge AI set to alleviate a new beachcomber of innovation.”

Goldman Sachs’ projections for top smartphone vendors. Chart and data: Goldman Sachs