AI smartphone: Consumers are adopting a “wait-and-see” approach says Jefferies

Despite strong investor interest in AI smartphones, consumers are adopting a “wait-and-see” approach, Jefferies analysts said Thursday.

The investment bank believes consumers are not yet fully excited about AI features on smartphones, likely because they are unsure of what AI could offer, its cost, and its user-friendliness on these devices.

“Most smartphone OEMs, other than Apple (NASDAQ:), have yet to figure out what AI services consumers want and what tech solutions need to be developed to make on-device AI a reality,” analysts said in a note.

“The Android camp would continue to face the challenge of a lack of an integrated hardware-software ecosystem in developing customized AI services,” they added.

Citing industry checks, Jefferies notes that China’s smartphone volume declined in the low single digits during both the second and third weeks of the 618 shopping festival. This followed nearly 30% growth in the first week, driven by deep discounts, particularly on iPhones.

Overall, the three-week period of 618 saw mid-single-digit year-over-year growth in volume, with mid-single-digit growth in Android and hardware, and high single-digit growth in iPhones. However, the outperformance of iPhones over Android and hardware has significantly narrowed, analysts said.