Ahead of the highly-anticipated launch of Apple Inc.'s (AAPL  ) iPhone 16 with AI integration, market analytics firm Canalys has predicted a boom in AI-capable smartphones over the next few years.

What Happened: The report forecasts that by the end of 2024, 16% of new smartphones will be generative AI-capable, driven by rapid advancements in chipset technology and increasing consumer demand.

By 2028, the firm expects more than half of the world's smartphones to be AI-capable.

Major global players such as Apple, Alphabet Inc.'s (GOOG  ) (GOOGL  ) Google, and Samsung Electronics Co Ltd. (SSNLF  ) along with leading Chinese smartphone companies are expected to lead the charge in integrating AI capabilities into their devices.

Google and Samsung have already integrated a few generative AI features in their latest smartphones, Pixel 8 and Galaxy S24, respectively.

Top 5 AI Use Cases On Phones

While AI is increasingly being used as a buzzword, the technology has some important use cases for smartphone users.

  • Background tasks like battery and connectivity optimization.
  • Generative AI tasks like text-to-image generation.
  • Communication-related features like call answering with live text translation.
  • Information-oriented tasks like AI-augmented search.
  • Productivity-related tasks like summarizing content.
Why It Matters: The AI smartphone market has been gaining momentum since 2024, with tech giants like Microsoft Corp. (MSFT  ) and Intel Corp. (INTC  ) declaring 2024 as the "Year of AI PC."

The companies have been focusing on AI integration in their products, with Microsoft even adding a dedicated AI key to their devices.

Apple has been a significant player in this space, with analysts predicting an AI-driven "supercycle" for the iPhone 16. The company's focus on AI integration has been a key factor in its projected growth, with its market capitalization expected to hit $4 trillion by the end of the year.