Handsets with enhanced AI capabilities seen challenging other competitors

Huawei Technologies Co is plotting a strong comeback into the smartphone industry. Its new devices boast enhanced artificial intelligence capabilities powered by large language models or LLMs and are likely to have access to reported upcoming 5G chips made by domestic partners.

Yu Chengdong, CEO of Huawei's device business group, said the company's smartphones are "on the comeback trail".

Market watchers said Huawei seems intent on garnering a greater share of the smartphone market in China.

Huawei's comeback, they said, will likely inject greater vitality into the smartphone market that has seen declines for a string of quarters now, and could challenge relatively new brands such as Honor.

In the second quarter of this year, Huawei's share of the domestic smartphone market jumped to 13 percent from 7.3 percent a year ago. What is noteworthy is that Huawei's rise came amid a lingering market-wide decline.

More importantly, Huawei, whose smartphone business has been crimped by US government restrictions since 2019, took the second spot in the high-end sector in the second quarter, Yu said at Huawei's developer conference in Shenzhen, Guangdong province, on Friday.

Huawei wound its way back into the top five smartphone brands in the second quarter, ranking along Xiaomi in the fifth spot in terms of shipments, said International Data Corp, a market research provider.

IDC attributed Huawei's growth to the resumption of normal product launches after partially resolving component shortages.

Meanwhile, at the developer conference, Huawei showcased enhanced in-handset AI capabilities powered by its self-developed LLM.The key technology behind ChatGPT, an AI chatbot developed by US-based AI research company OpenAI, is its LLM.

Jia Yongli, president of AI and smart full-scenario business department at Huawei's device group, said Celia, the company's voice-activated assistant, has become super smart, thanks to Huawei's own LLM.

For instance, Celia can quickly translate a 3,000-word English news report into Chinese, write a summary and provide relevant data so that readers can better understand it. Celia demonstrated its proficiency at the company's conference.

Trained by Huawei's LLM, Celia can not only understand user instructions but assist users in creating videos and copywriting, and in providing personalized suggestions and recommendations, Jia said.

But, like what other companies have already discovered, two aspects — computing power and cost — pose the biggest challenge in integrating LLMs into smartphones.

Lu Yanxia, research director at IDC China, said the success of LLMs depends highly on the support of computing power. LLMs typically require training with trillions of words, which is still a huge challenge for smartphones.

But with domestic mobile phone manufacturers, including Huawei, investing in the field, the application of LLMs in smartphones may create new opportunities, Lu said.

Using its own advances in chip design tools along with chipmaking, Huawei is reportedly seeking to procure 5G chips domestically from Semiconductor Manufacturing International Corp by the end of this year. If the plan pans out, the Chinese smartphone industry would be in for big change, experts said.

Huawei and SMIC did not comment on such reports, but some market watchers believe the reports to be true. "SMIC has already offered such chipmaking technology to other Chinese clients," one industry source who sought anonymity told China Daily.

Xu Zhijun, rotating chairman of Huawei, said in June the company has developed electronic design automation or EDA tools for chips above 14 nanometers by partnering with domestic companies and will complete comprehensive verification this year.

Success on that front could deal a big blow to Honor Device Co, which was spun off from Huawei more than two years ago. Honor is seen as a substitute for Huawei amid US government restrictions. But now, with Huawei on the comeback trail, Honor phones may lose their luster in the eyes of consumers, experts said.