"AI mobile phones will be the third major stage of change in the mobile phone industry after feature phones and smartphones. In the era of AI mobile phones, both the mobile phone industry and the user experience will usher in revolutionary changes." Liu Zuohu, chief product officer of OPPO, said at the OPPO AI strategy conference held on the 20th. Not only OPPO, but just after the Lunar New Year, Meizu also announced recently that it would stop the development of new projects for traditional smart phones (Meizu 21 Pro, Meizu 22, Meizu 23, etc.) and subsequently turn its energy to the exploration of new AI devices.

"At present, the development of hardware has entered a bottleneck period, and the convergence of various products is serious. There are no new killer applications or new usage scenarios in software in recent years. After implanting large models, the competitiveness of mobile phone products can be increased, and the differentiation of products can also be reflected." Guo Tianxiang, a senior analyst at IDC China, told reporters. In addition to the above-mentioned manufacturers, Huawei, Glory, vivo, Xiaomi and other mainstream hardware manufacturers have successively launched their own mobile phone end-side large models in a cooperative or self-research manner, and the development of AI has become the highlight of the smart hardware industry.

many big cows in the industry have said that 2024 is the first year of AI mobile phones. in this new round of technology competition, who will win and what form the industry will take will wait for the time to be announced. However, for the upstream supply chain, the change of AI mobile phones will undoubtedly promote the new demand for some modules. Many interviewees told reporters that suppliers such as computing power chips, memory chips and sensors are expected to benefit.

Downstream hardware vendors join in

at present, the development of traditional consumer electronics such as mobile phones and notebooks has entered a bottleneck period, and "no new ideas" and "inner volume" have become consumers' evaluation of most new products in the industry.

the latest data released by TechInsights show that although the emergence of Huawei's mate60 has set off a wave of consumer electronics boom, China's smartphone shipments still fell 0.3 percent year-on-year in the fourth quarter of 2023, the 11th consecutive quarter of decline. In 2023, China's smartphone market shipped 0.2617 billion units, down 5.8 percent from a year earlier.

At the same time, the AI model has received unprecedented development and attention in 2023, setting off a new wave of technology. For mobile phone manufacturers, combining AI with mobile phones is both a last resort and a trend.

"We regard AI as the most important strategy for the next era of mobile phones, and there is no upper limit for (investment)." Liu Zuohu told the media after the strategy conference, "For OPPO, AI is the most important thing in the next new era." Among the mainstream mobile phone manufacturers, OPPO is the first manufacturer to position AI as the "next generation strategy", which shows that the company attaches great importance to it.

Meizu, whose market share has fallen out of the top five, is more determined to announce directly that it will stop traditional smartphones and devote all its efforts to AI. Li Nan, former vice president of Meizu, tweeted after Meizu announced "All in AI": "We must change the track." It is worth mentioning that Shen Ziyu, CEO of Xingji Meizu, said publicly in November last year that "I hope (mobile phone business) can return to the top five in the domestic middle and high-end market in three years". After changing the strategic direction, whether this goal can be achieved is worth paying attention.

in addition, mainstream manufacturers have entered AI action. In November 2023, vivo officially released its self-developed blue heart model BlueLM, OriginOS 4 and self-developed blue river operating system BlueOS. Glory officially released the new operating system MagicOS 8.0 at the 2023 developer conference and launched Glory's first self-developed 7 billion parameter AI large model "Magic Large Model"; Huawei also announced in August 2023 that the mobile phone system was connected to Pangu large model and released Huawei Mate60 series mobile phones with built-in AI large model.

Counterpoint Research (global market research organization) estimates that the shipment volume of generated AI smart phones will be about 47 million units in 2023, accounting for about 4% of the total smart phones. Shipments of generated AI smart phones will exceed 0.1 billion units in 2024, accounting for 8% of smart phones. In 2027, there will be more than 0.5 billion units, accounting for 40% of smart phones. The compound growth rate will reach 83% from 2023 to 2027. Although some manufacturers such as Apple have not yet announced plans to enter AI, it is only a matter of time before mobile phone manufacturers enter AI when AI mobile phones have become the largest incremental market in the mobile phone field.

How far are we from a real AI phone?

So, what is an AI phone? What is the difference from a traditional smartphone?

Judging from the many products currently on the market under the banner of AI mobile phones, compared with powerful "artificial intelligence", the products currently on the market are closer to "mobile phones that support AI functions".

a Samsung flagship store salesperson told reporters that the AI function of its newly launched first AI mobile phone S24 is mainly reflected in picture optimization, translation and other functions. However, when the reporter asked about the advantages and disadvantages of the above functions compared with professional software such as Meitu Xiu Xiu and iFLYTEK, the person only said that "there is no parameter comparison". Guo Tianxiang believes that it is difficult for AI mobile phones to produce disruptive changes in daily use within 3 years.

However, the appearance of the next generation of AI mobile phones has already taken shape in the minds of manufacturers. Zhang Jun, product director of OPPO AI Center, said at the media communication meeting that the difference between smart phones and AI mobile phones that can support AI functions lies in their autonomous learning ability, efficient use of computing resources, creative ability and stronger perception ability.

"I think the biggest challenges for (AI phones) are, first, how to accurately perceive this real world; second, to have enough computing power; and third, to have the advanced nature of the algorithm. I think these will be challenges for any AI device, whether it's for phones or for any AI device." Liu Zuohu said at the media communication meeting on the 20th.

he further said that the biggest bottleneck for the requirement of mobile phone computing power is the bandwidth between CPU and memory. In terms of perception, the camera or microphone has not reached the level of real perception of the real world. "In terms of the advanced nature of the algorithm, OPPO must invest a lot in this aspect. How to really understand users, how to build this model, OPPO is also training its own big model." Liu Zuohu said.

With the entry of major manufacturers, a new round of technology arms race has begun. A person in the industry chain told reporters that if you want to make AI mobile phones that lead the market, strong R & D strength, sufficient computing power support, user base, and long-term capital investment are indispensable. In this case, the current head manufacturers still have an advantage.

Seize AI opportunities upstream

The industry is changing and the upstream supply chain is expected to share the pie.

Zhou Hua, chief analyst of CINNO Research, told reporters that the development of AI industry promotes the continuous upgrading and iteration of high computing power and large memory chips. at the same time, for other supporting chips and components, such as main control chips, sensors, memory chips, etc., their relevant adaptability has become the focus of development.

Haiguang Information (688041.SH), Cambrian (688256.SH), Longxin Zhongke (688047.SH) are the more prominent computing chip stocks of A- shares. At present, however, the mainstream mobile phone computing chip market is still occupied by overseas manufacturers such as Qualcomm and MediaTek.

memory chips, Beijing Junzheng (300223.SZ), Zhaoyi Innovation (603986.SH), Jiang Bolong (301308.SZ) and other A- share listed companies have a layout. Among them, Zhaoyi Innovation has attracted much attention due to the online supply of Apple VisionPro. When a reporter from Caixin News Agency called Zhaoyi Innovation Securities Department recently, its staff confirmed that this was the case. At the same time, the person also told the reporter, "Many mobile phones will carry one of our storage products under the screen."

In terms of sensors, it is reported that Xiaomi 14 series and Glory will use the sensors of Howie, a subsidiary of Weir (603501.SH), to launch new machines this year. It is understood that the current Weir shares of high-end image sensors have been gradually shipped, in the high-end market share is expected to expand.

In addition, analysts said that as the power consumption of the main chip of the AI mobile phone becomes larger, the memory chip capacity, and the battery capacity become larger, the current will become larger. Power management chip pressure, high-current performance needs to be improved, the value of the chip is expected to increase by 2-3 times. Xi Di Wei (688173.SH) Securities Department told reporters calling as investors that the company's power management products can indeed be used on some AI mobile phones, and whether the value of a single machine will be higher depends on the product performance ratio.