Jan 17, 2024

Samsung Seeks Double-Digit Sales Growth With New Flagship Phone

Yoolim Lee, Bloomberg News

An employee demonstrates the live translation function on a Samsung Electronics Co. Galaxy S24 smartphone during a media preview event in Seoul, South Korea, on Monday, Jan. 15, 2024. Samsung, the world's most prolific smartphone maker, is leaning into artificial intelligence as the key to unlocking greater sales this year. Photographer: SeongJoon Cho/Bloomberg , Bloomberg

(Bloomberg) -- Samsung Electronics Co. is pinning its hopes for a mobile revival on artificial intelligence.

AI will lift the global smartphone market back to growth and Samsung expects to outperform that with sales of its latest flagship devices, mobile chief TM Roh said in an interview. South Korea’s largest company on Wednesday unveiled the Galaxy S24 product family, days after losing the crown of world’s biggest smartphone maker to Apple Inc. and its iPhone.

The new devices are replete with AI enhancements, from Samsung and Alphabet Inc.’s Google, including built-in live translation of calls and a new search tool that lets users circle an image on the phone to get related information. Samsung also sprung a surprise by previewing the Galaxy Ring, an upcoming health-tracking gadget that shows its ambition to challenge Apple on another front.

Samsung is staking a lot on being early to integrate AI into the overall user experience and stealing a march on rivals like Apple and Xiaomi Corp. The company is targeting double-digit sales growth with its new flagship lineup, Roh said. Its sales of the Galaxy S24 models could be the best for that range in eight years and Samsung is positioned to grab half of the prospective market for AI-enhanced phones, according to KB Securities estimates.

The Korean firm, whose strength is usually in hardware, won’t go it alone. Samsung is leaning on Google’s Gemini AI suite with these initial features and it’s also worked closely with OpenAI backer Microsoft Corp. To handle the on-device processing of AI tasks, it’s using Qualcomm Inc.’s Snapdragon chips with dedicated processors for such jobs. Samsung and Google also recently announced they’ll reduce duplication in competing with Apple’s AirDrop by uniting around a single Android Quick Share feature.

“What ultimately matters is the user experience,” Roh said in an interview with Bloomberg News in San Jose, California. “We are always open to collaboration with our partners on new areas of the mobile industry.”

The company’s shares rose as much as 1.1% in Seoul on Thursday, following the showcase event at the SAP Centre in San Jose, Apple’s backyard. With an eye on attracting younger users, Samsung also highlighted enhanced camera zoom and editing features, including the option to convert regular video into slow motion by inserting frames with the help of AI.

Read More: Samsung Bets on Google-Powered AI Features in Smartphone Revamp

The Suwon-based company, also the world’s largest memory chipmaker, spent 2023 digesting insights from its users and tailoring new AI features and additions to enhance the appeal of its latest device generation. While AI and machine learning have long been used on phones, the rise of tools like OpenAI’s ChatGPT has triggered a rush to deliver more sophisticated services directly on people’s devices.

“The AI-related features can really bring convenience and could encourage consumers to switch their phones,” said Lee Changmin, an analyst at KB Securities. Some small-cap AI-related stocks in Korea already saw some gains before the S24 was unveiled and may move again after the launch, with the deciding factor being the quality of Samsung’s new added features.

Samsung’s plans are not limited to the new handsets, as the company intends to roll out AI features to some of its earlier models in the Galaxy S series in the first half of this year, 55-year-old Roh said. The company recorded double-digit growth between its Galaxy S22 and last year’s S23 generation, giving it confidence it can repeat the feat.

Its new Galaxy Ring health tracker will also be released this year, according to Hon Pak, head of Samsung’s mobile digital health team. The teaser to the device comes just as Apple is navigating a lawsuit around the oxygen-measuring features of its Apple Watch. Samsung intends to integrate the Galaxy Ring closely with its smartphones in order to make a stronger ecosystem proposition to consumers.

Still, the global smartphone market has been in the doldrums for years and was again down last year. Samsung’s own shipments declined by 13.6% in 2023, according to IDC estimates. Roh expects both to rebound in 2024, as the advent of AI injects some much-needed excitement into the category. Many consumers are also due for upgrades following a sales boom in 2021, with the typical upgrade cycle now being roughly three years, he added.

Roh, like some market estimates, expects the global smartphone shipments to expand by around 5% to 6% this year, though he hopes to outperform the consensus with Samsung’s new devices.

After ceding ground to Apple last year, Samsung sees room to regain its position. That’s because AI — even while it risks consumer fatigue with excessive hype — is not a fad, Roh said. Like the era of the internet and smartphones, AI signals a seismic shift in our relationship with technology, which may reorganize the industry’s leadership, he said.

“The S24 marks just the beginning of a new era when AI technologies go mainstream,” Roh said. “Hopefully it will help revitalize the global mobile industry.”

--With assistance from Youkyung Lee.

(Updates with details of Samsung strategy and share price move)