Smartphone makers are dreaming of a ‘supercycle’ driven by AI. Analysts disagree
Samsung Electronics’ flagship smartphones Galaxy S24 series are displayed during their unveiling ceremony in Seoul, South Korea, January 15, 2024.
Kim Hong-ji | Reuters
BARCELONA – Smartphone makers are talking a big game about artificial intelligence this year.
And they’re so confident about features they’re cramming into their phones that they think it’ll drive a new “supercycle” for the industry.
Samsung, Google, and Chinese firm Honor are among the names that are beefing up their latest handsets with AI-powered features for translating and summarizing conversations and taking and editing photos with the power of generative AI algorithms.
These are algorithms that are baked into the devices’ chips themselves, rather than accessed via the cloud.
Samsung has gone big on generative AI with its Galaxy S24 Ultra smartphone.
Google, too, has integrated AI directly into its latest Pixel phones.
Apple, meanwhile, is also reportedly exploring the addition of on-device AI features to the next iPhone, per the Financial Times.
This is all coming at a time when Mobile World Congress, the mobile technology industry’s biggest trade show of the year, is kicking off.
Major device makers like Samsung, Huawei, Honor, and Oppo, plus chip companies like Qualcomm and MediaTek, are expected to talk a big game about how much AI is transforming our personal devices.
When was the last smartphone supercycle?
Smartphone makers have been dreaming of a “supercycle” in their industry, driven by AI, after a bruising few years that saw device sales slow aggressively.
In 2023, smartphone sales fell to 1.16 billion units, the lowest point for unit shipments in a decade.
The last “supercycle” in smartphones happened between 2010 and 2015, where in five years the market grew fivefold from roughly 300 million units sold per year to 1.5 billion units, according to IDC data.
That came at a time when smartphones were just starting to become mainstream thanks to the emergence of widely used applications: Facebook, Instagram, WhatsApp, Uber, Snapchat, Twitter, and Candy Crush Saga, to name a few.
“The growth happened not just because Apple launched the iPhone, or because Google launched Android,” Francisco Jeronimo, vice president of data and analytics at research firm IDC, told CNBC.
“What really made it successful, that supercycle, was the fact that people were able to get the internet in their pocket,” Jeronimo said, in a phone interview with CNBC.
Other things were happening at the time, including the ability to make video calls over the internet with 3G, and the transition to 4G which meant faster speeds.
“We saw very popular operating systems not just the browser, but a world of applications that brought so many services and so much content through the phone,” Jeronimo said.
Ben Wood, chief analyst of CCS Insight, pinpoints the unveiling of the iPhone as the last “seismic disruption” that took place in the industry.
“Everything since then has been less disruptive,” Wood told CNBC.
‘AI phone era’
Major smartphone players are betting that a supercycle is about to happen thanks to AI.
Samsung, which launched the Galaxy S24 Ultra earlier this year, thinks that there’s a strong chance that AI will drive a new dawn that can breathe fresh life into the industry.
James Kitto, Samsung’s head of mobile experience division in the U.K., told CNBC the mobile industry is at the start of a new era of hypergrowth driven by AI.
“There’s every expectation that will be the case. We’re seeing some really, really high demand,” Kitto told CNBC from Samsung’s European headquarters in Chertsey, England.
The Galaxy S24 came with the ability to circle an object on your camera and pull up Google Search results for it, as well as live translation of phone calls to people speaking in foreign languages.
“We’re right now at the dawning of an entirely new era, an AI phone era,” Kitto said.
Brian Rakowski, vice president of product management for Google’s Pixel phone unit, said he expects AI to drive renewed interest around mobile technology.
Google has been working on integrating AI into its devices for years, most notably with the addition of Tensor line of smartphone processors.
“We already saw that AI was going to be the differentiator and the next wave of innovation across all technology but especially mobile,” Rakowski told CNBC. “It is so key to everything all our computing lives and computing platform.”
Google recently made it possible for its Tensor Processing Units, or TPUs, to run its Gemini nano AI system. This is a smaller version of its family of large language models which come under the umbrella name Gemini.
Google is expecting it will launch more advanced versions of Gemini on Android next year, according to Rakowski.
“We’ve placed a lot of bets and have really close collaboration with the research team at [AI lab] DeepMind to make sure Pixel is the best way to showcase and surface what’s coming down the pipe,” Rakowski said.
“No one knew that LLMs would be the thing. But we expected breakthroughs in the space,” he added.
Why a supercycle is unlikely
Analysts say a supercycle is unlikely to occur within the next few years as there’s not enough going on in the market in terms of novel features and innovation that will convince people holding their aging smartphones to upgrade.
Sales are expected to see growth this year, according to IDC, with smartphone shipments expected to climb 2.4% this year to 1.19 billion units in 2024. But that’s coming off a low base, and overall represents lackluster growth for an industry.
Growth is expected to remain stagnant from there in the coming years, with IDC forecasting incremental year-over-year increases of between 2% and 3% from 2025 to 2028.
Consumers remain wary about the prospect of upgrading their smartphones today as the prices for upgrading are still elevated.
Plus, much of the latest models that are coming out are still only touting incremental improvements on what came before.
“Much as the potential of AI on smartphones is an exciting prospect, I don’t believe the technology will contribute to a new supercycle for smartphone sales,” Wood told CNBC via email.
“At best it will help sustain sales and add a little bit of extra interest in smartphones at a time when the hardware is becoming increasingly boring.”
Today, there’s not enough excitement about smartphones on a broader level to justify a sales boom of the kind many companies are dreaming up.
That will change in the coming years, according to Jeronimo — but only once artificial intelligence starts becoming useful for consumers.
“If there’s anything that could make [a supercycle] happen, it would be AI,” Jeronimo said. “But with AI, there’s this question mark of how much the phone will become intelligent.”
Smartphones today “are not intelligent,” he added.
“If you see a billboard of the latest Tarantino or ‘Mission Impossible’ movie, what do you do? You need to open an app, book tickets in that app, send texts to your wife, text where she needs to go, go into your calendar app, check when is the best day to go to the movie, and so on.”
Plenty of companies are working on tech that can do exactly this.
For example, Humane has its AI Pin, a compact, square-shaped device that users can speak with to ask it to do certain tasks like setting reminders. It uses OpenAI’s large language models to do so.
Another startup, Rabbit, has a similar device. Geely-owned firm Meizu, meanwhile, recently said it’s giving up on making Android smartphones in favor of creating an AI-focused hardware product.
Chief executive officer of Google Sundar Pichai.
Marek Antoni Iwanczuk | Sopa Images | Lightrocket | Getty Images
Google on Friday made the latest a splash in the AI talent wars, announcing an agreement to bring in Varun Mohan, co-founder and CEO of artificial intelligence coding startup Windsurf.
As part of the deal, Google will also hire other senior Windsurf research and development employees. Google is not investing in Windsurf, but the search giant will take a nonexclusive license to certain Windsurf technology, according to a person familiar with the matter. Windsurf remains free to license its technology to others.
“We’re excited to welcome some top AI coding talent from Windsurf’s team to Google DeepMind to advance our work in agentic coding,” a Google spokesperson wrote in an email. “We’re excited to continue bringing the benefits of Gemini to software developers everywhere.”
The deal between Google and Windsurf comes after the AI coding startup had been in talks with OpenAI for a $3 billion acquisition deal, CNBC reported in April. OpenAI did not immediately respond to a request for comment.
The move ratchets up the talent war in AI particularly among prominent companies. Meta has made lucrative job offers to several employees at OpenAI in recent weeks. Most notably, the Facebook parent added Scale AI founder Alexandr Wang to lead its AI strategy as part of a $14.3 billion investment into his startup.
Douglas Chen, another Windsurf co-founder, will be among those joining Google in the deal, Jeff Wang, the startup’s new interim CEO and its head of business for the past two years, wrote in a post on X.
“Most of Windsurf’s world-class team will continue to build the Windsurf product with the goal of maximizing its impact in the enterprise,” Wang wrote.
Windsurf has become more popular this year as an option for so-called vibe coding, which is the process of using new age AI tools to write code. Developers and non-developers have embraced the concept, leading to more revenue for Windsurf and competitors, such as Cursor, which OpenAI also looked at buying. All the interest has led investors to assign higher valuations to the startups.
This isn’t the first time Google has hired select people out of a startup. It did the same with Character.AI last summer. Amazon and Microsoft have also absorbed AI talent in this fashion, with the Adept and Inflection deals, respectively.
Microsoft is pushing an agent mode in its Visual Studio Code editor for vibe coding. In April, Microsoft CEO Satya Nadella said AI is composing as much of 30% of his company’s code.
The Verge reported the Google-Windsurf deal earlier on Friday.
Technology
Nvidia’s Jensen Huang sells more than $36 million in stock, catches Warren Buffett in net worth
Jensen Huang, CEO of Nvidia, holds a motherboard as he speaks during the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France, on June 11, 2025.
Gonzalo Fuentes | Reuters
Nvidia CEO Jensen Huang unloaded roughly $36.4 million worth of stock in the leading artificial intelligence chipmaker, according to a U.S. Securities and Exchange Commission filing.
The sale, which totals 225,000 shares, comes as part of Huang’s previously adopted plan in March to unload up to 6 million shares of Nvidia through the end of the year. He sold his first batch of stock from the agreement in June, equaling about $15 million.
Last year, the tech executive sold about $700 million worth of shares as part of a prearranged plan. Nvidia stock climbed about 1% Friday.
Huang’s net worth has skyrocketed as investors bet on Nvidia’s AI dominance and graphics processing units powering large language models.
The 62-year-old’s wealth has grown by more than a quarter, or about $29 billion, since the start of 2025 alone, based on Bloomberg’s Billionaires Index. His net worth last stood at $143 billion in the index, putting him neck-and-neck with Berkshire Hathaway‘s Warren Buffett at $144 billion.
Shortly after the market opened Friday, Fortune‘s analysis of net worth had Huang ahead of Buffett, with the Nvidia CEO at $143.7 billion and the Oracle of Omaha at $142.1 billion.
The company has also achieved its own notable milestones this year, as it prospers off the AI boom.
On Wednesday, the Santa Clara, California-based chipmaker became the first company to top a $4 trillion market capitalization, beating out both Microsoft and Apple. The chipmaker closed above that milestone Thursday as CNBC reported that the technology titan met with President Donald Trump.
Brooke Seawell, venture partner at New Enterprise Associates, sold about $24 million worth of Nvidia shares, according to an SEC filing. Seawell has been on the company’s board since 1997, according to the company.
Huang still holds more than 858 million shares of Nvidia, both directly and indirectly, in different partnerships and trusts.
WATCH: Nvidia hits $4 trillion in market cap milestone despite curbs on chip exports
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