Samsung Eyes AI as a Lifeline in China’s Competitive Smartphone Market
Samsung, the world’s largest smartphone manufacturer, is doubling down on artificial intelligence (AI) as its weapon of choice to regain its footing in China’s fiercely competitive smartphone market. After years of struggling to gain traction against dominant local players like Huawei, Samsung is hoping that Galaxy AI, a suite of AI-powered features, will differentiate its offerings and attract Chinese consumers.
Key Takeaways:
- Samsung is prioritizing the development of Galaxy AI specifically for the Chinese market. This move signifies their recognition of the importance of tailored AI solutions to meet the unique demands of Chinese consumers.
- Partnerships with local tech giants like Baidu are crucial for Samsung’s AI success in China. The strict regulations surrounding the development and use of AI necessitate collaborating with established Chinese companies.
- Samsung’s focus on premium devices and expanding distribution channels remains integral to its China strategy. While AI is a key component, the company recognizes the importance of a holistic approach.
- Analysts are cautious about Samsung’s prospects in China, citing the company’s low brand awareness and competition from established local players. Many question whether AI features alone can convince Chinese consumers to switch brands.
Samsung’s AI Ambitions in China
The South Korean tech giant has encountered significant difficulties penetrating the Chinese smartphone market, with its market share plummeting to less than 1%. This stark reality has forced the company to rethink its strategy. "We are especially developing and we are going to especially develop our Galaxy AI capabilities for that market," TM Roh, head of Samsung’s mobile business, told CNBC during an interview.
Roh emphasized the importance of creating mobile AI specifically catered to Chinese consumer preferences. This strategic focus aims to address the challenges posed by local players who already have a strong foothold in the market. He acknowledges the need to "advance this technology that will contribute to the recovery we’re going to have in the Chinese market."
Navigating China’s Complex AI Landscape
Samsung’s ambitions are not without their hurdles. China has implemented stringent regulations governing the development and deployment of AI, creating a complex landscape for foreign companies. The country’s tightly controlled internet landscape and emphasis on data privacy require foreign firms to partner with local companies to gain access.
One example of this necessity is the integration of Baidu’s Ernie chatbot into Samsung’s Galaxy S24 smartphones. This strategic partnership demonstrates Samsung’s willingness to collaborate with local players to ensure compliance with regulations and leverage their expertise in the Chinese market.
Challenges and Criticisms
While Samsung is pushing forward with its AI strategy, analysts remain skeptical about its chances of success. Francisco Jeronimo, vice president of device research for Europe, the Middle East, and Africa at IDC, believes that introducing AI features alone "won’t make a massive difference" for Samsung in China. He argues that the company’s low brand awareness among Chinese consumers and the presence of strong local competitors pose significant barriers to entry.
Jeronimo poses the question: "What can Samsung bring to the market that is so unique for Chinese consumers to chuck away their Huawei, Xiaomi, and Honor smartphone and buy a Samsung?" The answer, he suggests, is not solely about AI features but a broader strategy of establishing stronger brand recognition and offering genuinely compelling innovations.
A Multi-Pronged Approach
Samsung’s ambitions don’t hinge solely on AI. The company is simultaneously working to enhance its product portfolio with premium devices, emphasizing innovation and targeting a segment of consumers seeking a higher quality experience. Alongside this, they are focused on expanding their distribution and retail sales channels to reach a larger audience.
Roh states: "Currently, although piecemeal, but we are making progress step by step, we are putting together our efforts to create the products and features that will be wanted by the consumers and that can satisfy the consumers out there."
The Stakes are High
Samsung’s gamble on AI in China is a high-stakes endeavor. The company is facing formidable competition from established local players, and its success will rely on its ability to adapt to the unique demands of the Chinese market and find ways to differentiate itself. While AI holds promise, securing success in the Chinese smartphone market will require a multi-pronged strategy that addresses brand perception, product innovation, and distribution channels. It will be fascinating to see how Samsung’s AI strategy fares in the highly competitive Chinese tech landscape.
