The future of the smartphone industry is set to be transformed as worldwide generative AI (GenAI) smartphone shipments are forecast to grow 363.6 percent year over year in 2024 to 234.2 million units, according to a new International Data Corporation (IDC) forecast. This represents 19 percent of the overall smartphone market in 2024.

IDC defines GenAI smartphones as devices that feature a system-on-a-chip (SoC) capable of running on-device GenAI models more quickly and efficiently leveraging a neural processing unit (NPU) with 30 tera operations per second (TOPS) or more performance using the int-8 data type.

Despite the challenges of elongated refresh cycles and macroeconomic uncertainties, GenAI capabilities on the smartphone will drive upgrades and represent a significant opportunity for both vendors and application developers alike. The dramatic growth seen in 2024 will carry into 2025 with shipments of GenAI smartphones expected to grow 73.1 percent year over year. Moderate double-digit growth is expected for the rest of the forecast period. By 2028, IDC forecasts 912 million GenAI smartphone shipments, resulting in a 2024-2028 compound annual growth rate (CAGR) of 78.4 percent.

"The rapid incorporation of GenAI in smartphones is unprecedented in mobile history with market penetration expected to exceed 60 percent within the first three years," said Nabila Popal, senior research director with IDC's Worldwide Tracker Team. "However, the most significant impact of this evolution is anticipated in 2026, when mid-range devices are expected to adopt this technology, making a momentous leap towards the democratization of GenAI. While it is still too early to know all the use cases that will emerge in the coming years, one thing is for sure, GenAI will completely transform the way we interact with our smartphones."

While the sales of GenAI smartphones in the first year or two will likely be limited to flagship devices, the future holds even more exciting developments. As phones capable of running GenAI on the device become more prevalent, the potential for more personalized and proactive AI assistants becomes increasingly likely. This evolution, driven by consumer demand, application developments, and overall industry growth, promises to make the next decade the most exciting period for the smartphone market.

"GenAI smartphones are inevitable and look to be the next big thing the industry has to offer consumers," said Anthony Scarsella, research director, Mobile Phones at IDC. "The triple-digit growth in 2024 will be followed by four consecutive years of double-digit growth as device manufacturers look to incorporate GenAI capable features across their device offerings. The cost will remain a critical inhibitor initially as many of the capable chipsets don't come cheap and are available primarily in the ultra-premium segment of the market. However, over time, we believe these components will enter the mid-market and more affordable models as competition grows among device manufacturers and AI applications."