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.
The letters AI, which stands for “artificial intelligence,” stand at the Amazon Web Services booth at the Hannover Messe industrial trade fair in Hannover, Germany, on March 31, 2025.
Julian Stratenschulte | Picture Alliance | Getty Images
Amazon said Wednesday that its cloud division has developed hardware to cool down next-generation Nvidia graphics processing units that are used for artificial intelligence workloads.
Nvidia’s GPUs, which have powered the generative AI boom, require massive amounts of energy. That means companies using the processors need additional equipment to cool them down.
Amazon considered erecting data centers that could accommodate widespread liquid cooling to make the most of these power-hungry Nvidia GPUs. But that process would have taken too long, and commercially available equipment wouldn’t have worked, Dave Brown, vice president of compute and machine learning services at Amazon Web Services, said in a video posted to YouTube.
“They would take up too much data center floor space or increase water usage substantially,” Brown said. “And while some of these solutions could work for lower volumes at other providers, they simply wouldn’t be enough liquid-cooling capacity to support our scale.”
Rather, Amazon engineers conceived of the In-Row Heat Exchanger, or IRHX, that can be plugged into existing and new data centers. More traditional air cooling was sufficient for previous generations of Nvidia chips.
Customers can now access the AWS service as computing instances that go by the name P6e, Brown wrote in a blog post. The new systems accompany Nvidia’s design for dense computing power. Nvidia’s GB200 NVL72 packs a single rack with 72 Nvidia Blackwell GPUs that are wired together to train and run large AI models.
Computing clusters based on Nvidia’s GB200 NVL72 have previously been available through Microsoft or CoreWeave. AWS is the world’s largest supplier of cloud infrastructure.
Amazon has rolled out its own infrastructure hardware in the past. The company has custom chips for general-purpose computing and for AI, and designed its own storage servers and networking routers. In running homegrown hardware, Amazon depends less on third-party suppliers, which can benefit the company’s bottom line. In the first quarter, AWS delivered the widest operating margin since at least 2014, and the unit is responsible for most of Amazon’s net income.
Microsoft, the second largest cloud provider, has followed Amazon’s lead and made strides in chip development. In 2023, the company designed its own systems called Sidekicks to cool the Maia AI chips it developed.
WATCH: AWS announces latest CPU chip, will deliver record networking speed
The logo of the cryptocurrency Bitcoin can be seen on a coin in front of a Bitcoin chart.
Silas Stein | Picture Alliance | Getty Images
Bitcoin hit a fresh record on Wednesday afternoon as an Nvidia-led rally in equities helped push the price of the cryptocurrency higher into the stock market close.
The price of bitcoin was last up 1.9%, trading at $110,947.49, according to Coin Metrics. Just before 4:00 p.m. ET, it hit a high of $112,052.24, surpassing its May 22 record of $111,999.
The flagship cryptocurrency has been trading in a tight range for several weeks despite billions of dollars flowing into bitcoin exchange traded funds. Bitcoin purchases by public companies outpaced ETF inflows in the second quarter. Still, bitcoin is up just 2% in the past month.
Bitcoin climbs above $112,000
On Wednesday, tech stocks rallied as Nvidia became the first company to briefly touch $4 trillion in market capitalization. In the same session, investors appeared to shrug off the latest tariff developments from President Donald Trump. The tech-heavy Nasdaq Composite notched a record close.
While institutions broadly have embraced bitcoin’s “digital gold” narrative, it is still a risk asset that rises and falls alongside stocks depending on what’s driving investor sentiment. When the market is in risk-on mode and investors buy growth-oriented assets like tech stocks, bitcoin and crypto tend to rally with them.
Investors have been expecting bitcoin to reach new records in the second half of the year as corporate treasuries accelerate their bitcoin buying sprees and Congress gets closer to passing crypto legislation.
Dado Ruvic | Reuters
Perplexity AI on Wednesday launched a new artificial intelligence-powered web browser called Comet in the startup’s latest effort to compete in the consumer internet market against companies like Google and Microsoft.
Comet will allow users to connect with enterprise applications like Slack and ask complex questions via voice and text, according to a brief demo video Perplexity released on Wednesday.
The browser is available to Perplexity Max subscribers, and the company said invite-only access will roll out to a waitlist over the summer. Perplexity Max costs users $200 per month.
“We built Comet to let the internet do what it has been begging to do: to amplify our intelligence,” Perplexity wrote in a blog post on Wednesday.
Perplexity is best known for its AI-powered search engine that gives users simple answers to questions and links out to the original source material on the web. After the company was accused of plagiarizing content from media outlets, it launched a revenue-sharing model with publishers last year.
In May, Perplexity was in late-stage talks to raise $500 million at a $14 billion valuation, a source familiar confirmed to CNBC. The startup was also approached by Meta earlier this year about a potential acquisition, but the companies did not finalize a deal.
“We will continue to launch new features and functionality for Comet, improve experiences based on your feedback, and focus relentlessly–as we always have–on building accurate and trustworthy AI that fuels human curiosity,” Perplexity said Wednesday.
WATCH: Perplexity CEO on AI race: The market of providing answers to questions will become a commodity
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Sports2 years agoButton battles heat exhaustion in NASCAR debut
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike