Chinese smartphone giants Honor and Xiaomi show AI's vast market potential at MWC Barcelona to challenge Samsung, other global rivals

Chinese smartphone makers, led by Honor and Xiaomi, flexed their generative artificial intelligence (AI) prowess at this year's edition of MWC Barcelona to challenge Samsung Electronics and other major rivals, but it remains to be seen whether they can successfully pull off this ambitious undertaking globally, according to industry analysts.

"China is a test field for generative AI, and various smartphone features are still in the trial-and-error stage," said Lucas Zhong, a Shanghai-based analyst at tech research firm Canalys. But he indicated that the mainland's handset makers are "more radical" than their global peers in exploring the potential of generative AI - algorithms like what ChatGPT uses to create new content, including audio, code, images, text, simulations and videos.

At the four-day MWC Barcelona, the world's biggest mobile communications industry trade show that concluded on Thursday, Honor showcased a string of AI features on its latest 5G Android smartphone, the Magic6 Pro. This handset's Magic Portal function harnesses the power of AI to understand user behaviour and streamline tasks, such as quickly recognising addresses in a text message to direct users to Google Maps.

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At a nearby booth in the same MWC Barcelona exhibition floor, Xiaomi displayed its new flagship handset model, the 14 Ultra, which features enhanced photography features and AI capabilities. The handset's AI Album Search function employs natural language processing that enables users to locate specific images within their collections based on a prompt describing them, while AI Portraits can create novel compositions derived from pre-existing images.

Xiaomi's new artificial intelligence-enabled Ultra 14 smartphone model. Photo: Xiaomi alt=Xiaomi's new artificial intelligence-enabled Ultra 14 smartphone model. Photo: Xiaomi>

Increased AI integration in Chinese smartphones shows how a new tech arms race in the industry is heating up, several weeks after Samsung unveiled its new Galaxy S24 handsets with AI features based on Google's Gemini technology.

AI was also a major theme at this week's MWC Barcelona, which had its venue festooned with prominent signages of "AI" and "intelligence". There were also plenty of product demonstrations, from telecommunications network operators and equipment makers to smartphone vendors, that touted the market potential of AI.

At the current stage, generative AI features on smartphones will not be a determining factor for consumers in their purchase decisions, "at least not in 2024", according to Ethan Qi, an associate director at Counterpoint Research.

"Currently, it is still hype," Qi said. "When we're past the bubble period in two or three years, consumers will see the actual distinctions between an AI phone and what they have now, which would prompt them to upgrade their handsets."

Still, the latest AI-enabled devices from Chinese vendors have given this emerging market segment an early start. China last year shipped 5 million AI-capable smartphones, more than any other market worldwide, according to data from Canalys.

Mainland smartphone makers have rushed to deepen their commitment to using generative AI on their devices, as all major vendors have each launched their own large language model (LLM) - the technology used to train ChatGPT and similar AI services.

Counterpoint has forecast global shipments of generative AI-enabled (GenAI) smartphones to reach more than 100 million units this year, up from about 47 million in 2023, and rapidly expand to 552 million by 2027.

GenAI handsets, a subset of AI smartphones, use generative AI technology to create original content, rather than just provide preprogrammed responses or perform predefined tasks.

MWC Barcelona attendees check out Honor's stand displaying the new Magic6 Pro smartphone on February 26, 2024. Photo: Agence France-Presse alt=MWC Barcelona attendees check out Honor's stand displaying the new Magic6 Pro smartphone on February 26, 2024. Photo: Agence France-Presse>

But AI services solely trained on Chinese-language LLMs could lose their edge when these are brought to overseas markets, Counterpoint's Qi said.

"Different countries have various market-specific requirements for LLMs, from privacy to content generation," Qi said. "Chinese smartphone vendors may need to rely on partnerships with overseas GenAI [system] providers and vie for exclusive capabilities from these partners to offer their consumers a better experience than their rivals."

In the case of Honor, the company's platform-level AI and industry-first intent-based user interface would need input from various software developers owing to how the app landscape overseas differs from the one in China, according to Canalys' Zhong.

Testing AI functions in China, the world's largest smartphone market, before bringing these overseas can provide some insights, Zhong said. But there is still a question mark on whether that would be enough for Chinese AI handset vendors to succeed outside their home market.

So it is not yet certain how Honor can localise its devices' AI functions by convincing overseas partners to open up their application programming interface and join the company's ecosystem, he added.

China's major smartphone makers are up against innovative tech powerhouses such as Samsung, which pledged to expand AI capabilities across the firm's product portfolio at MWC Barcelona.

Apple, meanwhile, has abandoned its decade-long effort to build an electric car to focus on building its generative AI capabilities, according to a Bloomberg report on Wednesday.

On the same day, Apple chief executive Tim Cook told the company's annual shareholders meeting that details of its generative AI plans would be disclosed later this year.

While Apple's slow pace in generative AI is not threatening enough to affect the US tech giant's global market share, iPhone sales face mounting pressure in mainland China because of a weak macroeconomic environment and the strong comeback of Huawei Technologies in the 5G handset segment. This week, Apple-authorised retailers on the mainland started offering steeper discounts on the latest iPhone 15 series.

Telecoms equipment giant Huawei, one of the biggest exhibitors at MWC Barcelona, only showcased a limited number of smartphone models, including its luxurious Mate 60 RS Ultimate Edition handset that is only available on the mainland.

The Shenzhen-based company, which nearly occupied an entire hall out of eight exhibition halls at MWC Barcelona, did not display its flagship Mate 60 Pro smartphone - powered by its home-grown Kirin 9000S processor that defied US tech restrictions - at the trade show. The popular model has helped US-sanctioned Huawei regain ground on the mainland, despite stiff competition from Apple and other Chinese Android handset vendors.

While Huawei remained "resolutely committed" to the overseas market, the firm currently has no plans to bring the Mate 60 Pro outside China, the head of international media at Huawei's consumer business group, James Warren, said on the sidelines of MWC Barcelona this week.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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