Smartphone sales will rebound starting in 2024, defying growing warnings of a prolonged decline across the mobile sector, according to separate projections from Goldman Sachs and Morgan Stanley reviewed by TechCrunch.
The Morgan Stanley report predicts that global smartphone shipments will recover nearly 4% in 2024 and 4.4% in 2025, ignoring comparisons with the PC industry’s multi-year downdrafts.
Driving change in smartphones will be new AI capabilities in devices that unlock new demand, says Morgan Stanley. The investment bank raised its projections for global phone volume to 2025, citing the considerable potential of so-called cutting-edge artificial intelligence to enable advances from enhanced photography to voice recognition while protecting user privacy. user.
Smartphone makers including Apple, Vivo, Xiaomi and Samsung have already started expressing optimism about AI. Vivo’s new X100 with on-device AI saw explosive sales, while Xiaomi promoted 6 times the usual volume for its AI-packed flagship. Samsung plans to add generative AI for 2024 models, aiming to offer ChatGPT-style features processed directly on phones, not in the cloud.
“The biggest obstacle is that there is no visibility on when the ‘killer app’ will be developed. “Taking desktop Internet and mobile Internet as examples, the emergence of a killer new app typically comes one to two years after the initial breakthrough,” Morgan Stanley wrote in a report this week.
“While there’s no guarantee that the Edge AI killer app will follow the same timeline, the emergence of Microsoft’s CoPilot as the potential AI killer app for PC could lay the groundwork for popularizing Edge AI (which implies features /AI functions at the edge). device, without relying on the cloud), and help give investors confidence that a similar, but different, great application for smartphones will also emerge.”
Morgan Stanley smartphone projection. India is the only market forecast for double-digit growth. (Chart and data: Morgan Stanley)
Goldman Sachs estimates that global smartphone volumes will fall 5% in 2023 to 1.148 billion units, down from 1.206 billion phones shipped last year. The 2023 drop would mark a second consecutive annual decline after much steeper declines in 2022.
But Goldman said momentum will pick up in 2024 and 2025, driven by new product launches. He forecasts that global smartphone shipments will rise 3% to 1.186 billion in 2024, and then rise another 5% to 1.209 billion in 2025.
“With the holiday season and continued replenishment, along with better supply chain guidance on market recovery, we revise 2023-25E smartphone shipments upward; however, we continue to expect low single-digit growth in 2024-25E, and for global smartphone shipments to gradually return to the 2022A level by 2025E,” Goldman Sachs analysts wrote.
The best mobile picture differs from the consensus views that maturing smartphones face threats of inertia and substitution similar to those of personal computers over the past decade. But Morgan Stanley said replacement cycles and use cases still favor mobile phones.
“Tablets and smartphones have been gaining market share from PCs since 2011. In other words, the decline in PC shipments is due to the emergence of new devices, not the disappearance of overall demand. We don’t see smartphones facing a similar risk of substitution by technologies like AR/VR anytime soon. Smartphone replacement cycles are shorter because they are used more frequently and have smaller batteries. “Smartphone use cases are still expanding and Edge AI is ready to unlock a new wave of innovation.”
Goldman Sachs projections for major smartphone vendors. (Chart and data: Goldman Sachs)
