Smartphone sales will rebound from 2024, defying growing warnings of a prolonged slump in the mobile sector, according to separate forecasts from Goldman Sachs and Morgan Stanley reviewed by TechCrunch.
The Morgan Stanley report predicts that global smartphone shipments will rebound by nearly 4% in 2024 and 4.4% in 2025, defying comparisons with the PC industry’s multi-year downturn.
Driving the smartphone recovery will be new in-device AI capabilities that unlock new demand, Morgan Stanley says. The investment bank raised its forecast for global phone volume to 2025, citing the significant potential of so-called edge AI to enable advances from enhanced photography to speech recognition while protecting user privacy.
Smartphone manufacturers, including Apple, Vivo, Xiaomi and Samsung, have already started expressing their silliness about artificial intelligence. Vivo’s new X100 with in-device AI saw explosive sales, while Xiaomi reported 6x the usual volume for its AI flagship. Samsung plans built-in genetic AI for 2024 models, aiming to offer ChatGPT-style features processed directly on phones rather than in the cloud.
“The biggest impact is that there is no visibility into when the ‘killer app’ will be deployed. If we take the desktop internet and the mobile internet as an example, the appearance of a new killer app usually comes 1-2 years after the initial discovery,” 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 a potential AI killer app for PC could lay the first foundation for the spread of AI to the edge ( denoting on-device, non-cloud-based AI features/function) and will help give investors confidence that a similar, but different, killer smartphone app will emerge.”
Smartphone view from Morgan Stanley. India is the only market forecast for double-digit growth. (Chart and data: Morgan Stanley)
Goldman Sachs estimates 2023 global smartphone volume to end 5% year-over-year decline 1.148 billion units, down from 1.206 billion phones shipped last year. The 2023 decline would mark a second consecutive annual decline after much steeper declines in 2022.
However, Goldman said momentum would rebuild in 2024 and 2025, fueled by new product launches. It predicts that global smartphone shipments will grow by 3% to 1.186 billion in 2024 and then increase by 5% to 1.209 billion in 2025.
“With the holiday season and continued inventory replenishment, along with better supply chain guidance for market recovery, we have revised our 2023-25E smartphone shipments. However, we continue to expect low single-digit growth in 2024-25E and global smartphone shipments to gradually return to the level of 2022A to 2025E,” Goldman Sachs analysts wrote.
The bright outlook for mobile differs from consensus views that maturing smartphones face similar threats of inactivity and substitution as personal computers have faced over the past decade. But Morgan Stanley said replacement cycles and use cases still favor cellphones.
“Tablets and smartphones have been taking share from PCs since 2011. In other words, the declines in PC shipments were driven by the emergence of new devices rather than the disappearance of demand in general. We don’t see smartphones facing a similar risk of being replaced by technologies like AR/VR any time soon. Smartphone replacement cycles are shorter because they are used more often and have smaller batteries. Smartphone use cases continue to expand, with Edge AI unlocking a new wave of innovation.”
Goldman Sachs projections for top smartphone vendors. (Chart and data: Goldman Sachs)
