AI integration reshaping consumer offerings, but upgrade hesitancy remains

The deep integration of artificial intelligence is fundamentally reshaping consumer electronics, driving a sector-wide transformation as tech giants shift focus from hardware specs to intelligent ecosystems.

As next-generation smart terminals scale commercially across China, such devices are evolving from isolated tools into intelligent nodes embedded across life and work scenarios, fundamentally reshaping human-machine interaction, according to a recent blue paper by the China Academy of Information and Communications Technology.

While this transformation spans everything from AI phones to humanoid robots and smart vehicles, market leaders face the dual realities of AI terminals representing the industry's brightest growth driver and the challenge of convincing consumers to upgrade.

"Various types of products, such as AI phones, AI PCs, smart wearables, humanoid robots, and intelligent and connected vehicles, are deeply integrating into daily life and industrial scenarios, and have become a key carrier of the new round of technological revolution and industrial transformation," the blue paper said.

Wang Zhiqin, vice-president of CAICT, said at a seminar in September that a paradigm shift from smart devices to AI terminals has been triggered by large models.

Far from simply grafting AI features onto products, she said, an AI terminal fundamentally redefines product design, interaction logic and value propositions based on the capabilities of large models — and this transformation is extending beyond phones and PCs to a broader range of devices.

Wang Jiping, vice-president of market research company International Data Corporation China, said that AI terminals have become a growth highlight, as producers face multiple pressures, including rising component costs and weakening consumer willingness to upgrade.

In an article published by the Securities Times, he said that while the traditional approach of driving sales through hardware performance competition has lost steam, user-centered, agent-based AI products will be a new growth driver for manufacturers.

According to forecasts by IDC, China's next-generation AI smartphone shipments will reach 147 million units in 2026, accounting for 53 percent of the market. The agency also forecasts global shipments of smart glasses to exceed 23.7 million units in 2026, with China at 4.9 million units.

Counterpoint Research, a global technology market research and advisory firm, expects generative-AI phones to account for 45 percent of global smartphone shipments in 2026.

Tarun Pathak, research director at Counterpoint Research, said that while generative AI has become a default feature on handsets priced above $400 wholesale, it has not yet given consumers a compelling reason to upgrade their devices.

There remains a gap between having access to AI-capable devices and actually using their AI features on a regular basis, Pathak said, adding that bridging this gap will require practical, everyday use cases that deliver consistent value.