Here Come The Really Smart Devices

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By Yan Taw (YT) Boon

Computex 2024 and Apple’s Worldwide Developers Conference heralded the potential ubiquity of AI-driven handheld devices.

Advances in artificial intelligence (AI) are poised to make current smart devices look downright dull.

This past June, humanity’s AI-driven future was on full display – from the grand stage of Apple’s Worldwide Developers Conference (WWDC) in Cupertino, Calif., to the vibrant floors of Computex in Taiwan.

In our view, the next generation of AI-packed smart devices has the potential to anticipate our needs and simplify our lives in ways we never thought possible – potentially spurring a new cycle of device upgrades and making seamless connectivity more relevant than ever.

At WWDC, Apple (AAPL, AAPL:CA) unveiled Apple Intelligence, a system that combines the power of generative models with personal context. By integrating ChatGPT access into Siri and its systemwide writing and imaging tools, users can expect a significantly enhanced experience.¹

Meanwhile, at Computex, Microsoft (MSFT, (MSFT:CA))) showcased its new AI-powered laptops featuring Copilot+ Windows, supported by Qualcomm’s (QCOM) Arm-based Snapdragon X Elite processing platform. Two innovative features include Recall (which allows users to review periodic snapshots of their computer screen in a way that feels like having photographic memory) and Live Captions (which can translate more than 40 spoken languages into English).²

We believe the proliferation of AI smart devices is set to spark a new era of device upgrades. Some estimates predict that the installed base of AI smartphones will expand 65% a year between 2024 and 2027, at which point it could exceed 1 billion units.³ Demand for AI PCs is also expected to ramp up to nearly two out of every three units shipped by 2028, up from just one in five in 2024.⁴ As internet and software companies continue to train new AI agents, we believe broader AI use cases will emerge, making AI virtually ubiquitous across smartphones, PCs and other novel devices.

But this transformation will also require processors capable of running on-device generative AI models more quickly and efficiently. In hardware terms, that means a shift away from traditional System on Chip (SOC) architectures to more sophisticated chiplet designs, where APUs/NPU processors are manufactured as separate, smaller chips and then assembled. We believe chipmakers capable of navigating this transition and delivering greater flexibility and performance should stand to benefit.

Sources

1) Apple Newsroom, June 10, 2024;

2) Official Microsoft Blog, May 20, 2024;

3) Counterpoint Research, April 15, 2024; 4) IDC, June 3, 2024.

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