The smartphone business is a tough one.  With hundreds of brands looking to catch a consumer’s eye and feature sets that grow longer with each new model, brands struggle to find something new and exciting each new model cycle.  Cameras were big a few years back, with phones having up to 6 cameras, but multiple cameras began to take up room needed for other components, so the fad moved from camera numbers to camera resolution, with current high-end phones in the 200MP resolution class.  To put that into perspective a 200MP camera has 16,384 x 12,288 pixels in a 1” x 1.2” package (18,369 Pixels per Inch).  But the challenge continues, as AI throws another variable into the smartphone mix.
It would seem that brands could be a bit wary about how AI will play out on mobile devices as it is quite difficult to tell whether the Ai flavor-of-the-month is pushing consumers to buy a new phone, so Samsung (005930.KS) has taken another track, and thin is in.  The just announced Samsung Galaxy S25 Edge is a mere 5.8mm thick, a 29.3% reduction from this year’s Samsung Galaxy S25 Ultra flagship smartphone. Here are just a few of the gushingly positive comments the tech press has made about the just announced Samsung Galaxy S25 Edge, their newly designed ‘super thin’ smartphone.

• "Thinner than a credit card..." - The Economic Times
• "Samsung's Galaxy S25 Edge is already turning heads in the tech world...for its sheer thinness." - The Economic Times
• "The S25 Edge is one of Samsung's thinnest flagships to date." - Techloy
• "The Shockingly Thin Samsung Galaxy S25 Edge Feels Great to Hold..." - PCMag

But while ‘thin’ might be the new rallying cry for smartphone designs, thin has been around for a long time, and the 5.8mm thick Galaxy S25 Edge is barely a contender for thinnest.  The earliest ‘thin’ phone we could find was the Samsung U100 that was released in February of 2007, 18 years ago, while this baby was a fat 5.9mm thick, it was certainly the first that met our criteria of being under 6mm.  That said, the real winners are the pack of contenders at the Wegovy-like 5.1mm, a staggering 12% thinner than the new Samsung S25 Edge!  In fact all of the smartphones that were 5.1mm (the smallest we can find) were released 10 years ago in 2015, a period in time when there was less smartphone hardware, less heat generation, and smaller batteries to take up space inside the case.  5.1mm is 0.2” or a bit less than ¼ of an inch.
We are sure that the ‘thin’ trend will have some sustainability, at least until something else comes along, as Apple (AAPL) (see below) is expected to be releasing the iPhone 17 Air, a substitute for the iPhone Plus model, with the iPhone 17 Air rumored to be only 5.5mm thick.  If both Samsung and Apple follow the trend, almost all others will join until one of the three largest components, the battery, the display, and the camera modules hits a limit.  Batteries can be made thinner by increasing the length and width, which, in theory, should make it easier for the battery to dissipate heat, but at the same time the thinner phone allows less room for the thermal interface that transfers the battery heat to the frame of the phone, so it’s a tradeoff.  The display itself is quite thin but the connector that attaches the display to the internal circuit board is also a limiting factor, and lastly the camera module needs a certain amount of depth to operate properly, also a gating factor.
All in, while thin is in currently, we expect thin as a smartphone feature to run its course relatively quickly unless primary component producers are able to work dimensional magic without compromising performance.  There is also the feeling of holding the phone in your hand when you use it, which changes with thickness and weight, but in a device that must fit into a pocket, less is more.

​As we noted yesterday Samsung Electronics (005930.KS) was expected to release what might turn out to be the replacement for the long-lived Samsung Galaxy S Plus flagship smartphone that has been a part of the company’s flagship line-up on an off since 2011.  While Samsung and many other brands have strict rules about suppliers and employees leaking information about a product before its release, leaking’ information about upcoming smartphones has become both a marketing tool and a game of cat and mouse. As can be seen by our comparison of yesterday’s (pre-release) feature set and today’s actual feature set, much of the key information about the Galaxy S25 Edge was already circulating and turned out to be largely correct.
Below we show our feature set list from yesterday and the actual feature list from the release.  We highlight those features that were not correct in yellow.  As can be seen, we were off by 3/100ths of an inch on the length and 1/100th of an inch on the width.  The Edge can handle both Sim types, not just one as we expected, the display has an LTPO (Low temperature Poly-Oxide) backplane (we were unsure if it would be LTPS or LTPO), and the initial price will be at the low end of our expectations at $1,100 for both memory configurations.  Other than those errors, the device features seem to have been well telegraphed.

The feature set is mostly as expected and even a bit better, the price is exactly between the price of the S25 and the S25 Ultra and the same price as the S25 Plus (512GB).  Of course lower would have been better, but in the case of the S25 Edge it seems Samsung is trying to update design rather than create a new price category.  The Galaxy FE (Fan Edition), which was released in September of last year, creates a lower-cost bridge between the Galaxy S25 series and Samsung’s mid and lower price tier lines.

Samsung (005930.KS) has been producing a ‘plus’ model of its flagship Galaxy S line on and off since 2011, substituting Galaxy Edge, Galaxy Lite, Galaxy Active and even the Galaxy FE in the years when the company did not release a Galaxy S+ version, yet since 2017 the Galaxy Plus model has appeared each year along with the standard Galaxy S and Galaxy Ultra models of its flagship line.  Tomorrow, Samsung will announce the Galaxy Edge, a new and improved Edge that has the opportunity to replace the Galaxy S Plus going forward.
The Galaxy S Plus has been the underperformer of the three flagship models, and this year Samsung is looking to see if a new Galaxy Edge model might be a better value for consumers than the S Plus going forward.  There are lots of Galaxy Edge features that have been leaked or speculated on, so we put together a comparison of the current Galaxy S25+ and the upcoming S25 Edge.  We note that the Edge feature list could change upon its release.  We note also that the concept behind the Edge is a thinner, lighter, sleeker’ phone with most of the features of the Plus, with less cameras but higher resolution ones.

According to suppliers, of the 37.7m Galaxy S25 series phones to be produced this year, the standard Galaxy S25 will represent 36.1%, the Ultra, 46.2% and the Plus only 17.89% based on expected demand, so the question will be whether the new Galaxy 25 Edge will be able to outsell the Plus.  If the Edge catches on with consumers, we expect that the Galaxy Plus will join the Samsung Neos, the Samsung Minis, and the Samsung Actives, all of whom have been sent to that farm upstate where all of the disabled and sickly hamsters are happily living out their retirement days.

Samsung Electronics (005930.KS) announced that it agreed to purchase the non-medical division (audio) business of Masimo (MASI), a company known for its healthcare products and an ongoing legal battle with Apple (AAPL) over the use of its wearable pulse-ox technology.  The purchase, which is expected to close before the end of this year will make Samsung’s Harman division the largest consumer audio company and will add to Harman’s strong presence in the automotive A/V market.  As shown below, Harman, which Samsung purchased eight years ago for $8b (a hefty 37% premium at the time) is a heavy-weight in both the consumer and automotive audio markets, and with the additional brands owned by Masimo, will extend its footprint in both markets.
The Harman division of Samsung, while a small part of sales (4.3% in 1Q ’25) and op profit (4.5% in 1Q ’25) is an adjunct to Samsung’s automotive business, which includes OLED displays (Samsung Display (pvt)), infotainment processors, image sensors (driver safety), DRAM & NAND for ADAS, and MLCC (Multi-layer ceramic capacitors).  While we don’t have access to detailed data on the non-medical part of Masimo’s business, we know that in 1Q of this year the company produced $146.7m in sales and generated a $6m pre-tax loss[1], somewhat better than 1Q ’24 where sales were $153.2m and generated an $18.5m loss. 
Samsung is paying $350m for the Masimo assets, which we believe is between 0.5x and 0.7x annual sales, a substantial discount to more typical 0.6x to 1.1x for these types of companies, although when Masimo purchased what were then the audio assets of Sound United () for $1.025b, the multiple was 1.6x to 1.7x.  Current long-term CAGR for segments in the audio space remain high (see below) but we believe those are optimistic, even so it seems Samsung was able to purchase these assets at a significant discount.  If they are able to leverage the Masimo businesses as they did with Harman, they should be able to move most of these new brands to profitability as they fall under Samsung’s broad advertising campaigns and substantial reach into Asia, where growth in the audio space is highest.


[1] Excluding all impairment charges.

As Samsung Electronics’ (005930.KS) 2025 premium TV line has only been available for ~40 days, we did not expect that prices would have changed from their initial levels, however we expected to see some price pressure on older (2024) models as production wanes for last year’s models and shifts to the 2025 line.  The big question was whether the typical price reductions for the previous year’s Tv set line would be offset by tariff costs.  We cannot answer the question fully yet, but in Samsung’s 2024 4K Mini-LED/QD line, where we would typically expect some price erosion, prices rose by 28.6% over the ~30 day period, as shown in Figure 1, bringing them back to levels seen at the beginning of this year.  Similarly, the entire 2024 4K premium TV set line (includes both Mini-LED/QD and QD only) saw a 20.1% price increase.  The 2024 8K line did not see much of a price change (+1.8%), while the 2024 QD only sets saw a 7% price increase, even as the offerings for about 1/3 of thoses line are no longer available.
Samsung’s 2025 OLED TV set line, which has been available for ~ one month followed a more typical early pattern and saw no price change during the period, however the 2024 OLED line did.  While the high and mid 2024 OLED price tier models saw a modest 2.9% decrease in price, as one might expect, the low-end models saw the opposite, rising 27.9% in less than 30 days.  Typical monthly price moves for most OLED models are +/-1.2% and while there have been bigger monthly moves than the average, this month’s increase was the largest ever for this segment of the line.
There are always a number of factors at work when it comes to pricing, particularly inventory levels, component pricing, FOREX, and consumer demand, but now we have the added factor of tariffs, which seem to change on a moment’s notice.  We cannot pin down the price movements we have seen here to a particular factor, but we expect there will be considerably more volatility in TV set pricing as existing on-shore inventory gets worked down.  As Samsung’s sets are assembled primarily in Mexico, for the time being they are exempt from more recent tariffs, as long as regional (Chinese components) sourcing does not exceed 40%.
This gives Samsung the ability to (if so desired) maintain low pricing while sets from Hisense (600060.CH), and TCL (000100.CH) rise, capturing incremental volume, however it seems that Samsung is moving prices up, despite the exemptions.  While this will be beneficial in the short-term if it is sustained, it will do little for shipment volumes and customer satisfaction.  With Chinese TV set brands competing aggressively for share in all markets, Samsung gains the price advantage for a while.  Whether they choose to use it to regain share is still an open question.

As the leader in both the smartphone and the TV set segment and one of only a few large memory producers, Samsung Electronics has considerable influence in the CE space.  They tend to be a leader in CE technology, particularly in the display space and produce both components and end end-user products.  As such they can be both an indicator and a lightning rod for change in the CE space, making them a valuable tool in understand the current an future status of consumer electronics.
Last night Samsung Electronics (005930.KS) reported 1st quarter 2025 results of 79.14 trillion won ($55.25b US) in sales, ↑4.4% q/q and ↑10.0% y/y and 1.3% above consensus with this quarter being the best in the company’s history.  Operating profit was 6.7 trillion won ($4.68b US), ↑3.1% q/q, ↑1.4% y/y, and ↑4.7% above consensus.  In order to better understand the table below, which breaks down sales and operating profit by Samsung division, we note:
DX (Device Experience) includes – TV sets & Monitors, Appliances, Smartphones and tablets, Network Equipment, and Health Products
DS (Device Solutions) – Memory, Processors & Sensors, Logic, foundry
SDC (Samsung Display) – small panel OLED and large panel QD/OLED displays
Harman – Automotive & Consumer audio

​Samsung also breaks out some components of its divisions.  The division formerly known as MX, which now is comprised of smartphone and tablet products (part of the DX division), the TV segment, also part of the DX division, and Memory, a part of the DS division.  While operating income is not given sales can be computed, as well as the share of sales of the company total,

The results were mixed, with some product categories outperforming and sone underperforming, essentially the way Samsung is supposed to operated in difficult times, although we expect many investors were hoping for a more positive quarter from the semiconductor segment, and a more optimistic feel for 2Q and 2H, which they did not get.  Samsung overall was careful to hedge any optimistic view of this year with the caveat of tariff uncertainty, and the division leaders were even more so, although the company was a bit more forthcoming about product rollouts and timelines than usual.
As a number of Samsung’s major products have been exempted from US reciprocal trade tariffs, they have only moderate exposure to direct import costs, but as a component supplier, they were cautious about raw material costs impacting component prices and how that would follow through the supply chain.  That said, without any hard US trade policy or realistic negotiations with major trading partners, and the prospects of another nuclear option in early July, they have little choice but to forge ahead as originally planned. 
As seems to be the case with many larger CE companies who have the option, they are considering shifting production from countries that have onerous tariff requirements to less onerous ones, but seem to be in no rush to make those changes.  We expect there will be lots of talk about how negotiations are progressing and how many deals have been agreed upon by July, but we also expect little confirmation, little detail, and even less about timelines for balancing trade.  While the full impact of tariffs has yet to be felt by consumers, the peripheral impact, such as a weak equity market, has already put consumers on edge, something mentioned by Samsung a number of times on the call, we believe a big part of Samsung’s cautious stand on 2Q and the rest of the year.
Getting all Samsung divisions to operate effectively and profitably is a complex task and one drenched in global macroeconomics, but a bit less ‘unknown’ might be helpful in getting the planets to align.  Below are our quick notes.  Comments in red are our own.

​General Comment Summary

• DX strength came from flagship smartphone strength (Galaxy S25 series) and high-end appliances
• DS weakness came from demand deferrals from High Bandwidth memory customers
• Capex – 12t won with 0.5t won for display (down substantially), as the Gen 8.6 IT OLED fab is completed and 10.9t won for the DS division overall.
• Repurchased 3t won of common and preferred as part of 10t won 2025 program, which continues in 2Q.

Memory - General

• Ai Server demand remained strong
• Some PC/Mobile demand improvement (Small, possibly China driven)
• SSD demand weak
• Some data center projects delayed

DRAM

• Bit growth higher than expected
• HBM export controls on AI chips and customers waiting for HBM3E release caused deferrals. 

NAND

• Bit growth down ~10% but above expectations as perception that market has bottomed sets in. More, less downside pressure than upside pressure.

Memory Outlook – 2Q

• AI Server demand to remain strong
• “Preemptive Purchasing” after tariff pause
• Memory for PC & Mobile inventory now normal because of China subsidy inclusion
• Overal,l expect some incremental demand but tariff remains a question

Memory Outlook – 2H

• Ai server demand to remain strong (Said a number of times)
• SSD to recover as deferred projects begin
• Incremental PC demand from Win10 end AI (Win10 replacement cycle theory seems dead – Ai better bet but still an unknown)
• Mobile demand improves due to AI

 
System LSI – General

• Weakness from delayed SoC adoption by major customer (Samsung)
• Strong demand for image sensors

LSI – 2Q Outlook

• Expect image sensor volume to decline
• SoC increase to offset sensor volume decline

LSI – 2H Outlook

• Limited mobile momentum
• SoC steady
• Will add product (Automotive sensors)

 
Foundry – General

• Seasonal weakness for mature nodes
• Inventory adjustments due to China trade tensions (meaning order reductions)
• New advanced node starts in 2H

Foundry - 2Q Outlook

• Subdued demand
• Ramping production for US automotive products (Tariff issues?)
• Tariffs could have big impact
• 2nm GAA production starts in 2Q, but small

Foundry - 2H Outlook

• Geopolitical Risk expected to increase
• Demand for PC & Mobile expected to weaken
• AI & HPC momentum still strong (advanced nodes)

 
Samsung Display – General

• Improvement in demand from major customers
• Favorable exchange rate
• But seasonally weak quarter
• Double digit monitor sales growth (QD/OLED share?)

SDC - 2Q Outlook

• Mobile – Conservative view due to tariff situation
• Will launch new ultra-high refresh rate monitors (gaming)

SDC - 2H Outlook

• Increasing uncertainty due to trade issues
• Competition increasing
• Weak consumer sentiment
• Mobile driver is AI
• QD/OLED will expand monitor line w. lower-priced models (Good news – when?)

Visual Display (TV) – General

• Demand was down q/q but up slightly y/y w. premium and ultra-large TVs driving growth.
• Raised prices and lowered material costs but…
• Overall TV demand remained weak, and the cost of competition was high

TV - 2Q Outlook

• TV demand flat y/y
• Expanding AI TV (Will consumers care?)

TV - 2H Outlook

• Demand for high-value products (Ultra-large and OLED) will remain

 
Q&A
Tariffs

• Semis, phones, tabs currently exempt
• Reviewing other products
• Potential to ‘manage’ global production

Stock Buyback

• Will cancel 2.5t won shares of 3t won current buyback

TV

• Intense entry-level competition
• Will add to 98”+ lineup

Memory

• NAND Bit growth up mid-teens in 2Q
• DRAM Bit growth up low 10%
• NAND for PC & Mobile price decreases to end – flat going forward

Foldables

• Differentiated AI for each foldable type

All in, we thought the quarter was just about as expected, although we were a bit surprised at the comments about data center deferrals, which was mentioned a number of times.  We were concerned that Samsung was as cautious about 2H, but we expect given the volatility of the situation, they have little choise.  The fact that they were able to find a way to the exemptions that will allow them to not have a disastrous year is a bit of an offset, but it is better to under-promise and overachieve than the opposite.

Samsung Display’s (pvt) QD/OLED display technology has faced some significant challenges.  Developed to bring Samsung Display into the large panel OLED business, which has been dominated by LG Display’s (LPL) WOLED panels, there seemed to be some skepticism from SDC’s parent Samsung Electronics (005930.KS).  We expect some of that skepticism came from low initial yields for QD/OLED, with Samsung needing a reliable source of high volume production before committing to the technology, but SDC persevered and refined production processes to more normalized yields.  Samsung Electronics adopted the technology in 2022 with 55” and 65” TV models, their first large panel OLED offerings since abandoning large panel OLED technology in 2013 and has maintained QD/OLED’s presence with additional sizes since then.  However with relatively limited production capabilities (~750,000 TV sets/year assuming 75% yield), Samsung seems to still be wary of relying solely on QD/OLED technology for its large panel OLED line and has purchased WOLED panels from LG Display to augment its large panel OLED offerings.
Quality does not seem an issue, in fact QD/OLED has been lauded for its color purity, color volume and higher peak brightness than WOLED displays, but despite these positive points parent Samsung still does not seem to have jumped into the QD/OLED pool deep-end and is offering both QD/OLED and WOLED (from LGD) to TV consumers, in some cases without disclosing which technology they are getting.  That said,  it seems that QD/OLED has found a home, and one that Samsung Electronics  seems to be in sync with; monitors, high-end monitors in particular.  Gamers, who look for high quality reproduction and rapid response time have been impressed with Samsung Display’s QD/OLED monitor product and a number of monitor brands have taken to QD/OLED for their flagship gaming monitors.
A quick look at Amazon (AMZN) or Best Buy (BBY) shows just under a dozen brands with at least one QD/OLED monitor offering, with sizes ranging from 27” to 49” and prices ranging from $589 to $1,285.  Considering that you can buy a 27” LCD monitor for under $100 and a 27” OLED monitor for under $500, QD/OLED monitors are certainly considered high-end, with most labeled ‘gaming monitors’ specifically.  Companies like MSI (2377.TT) and ASUS (2357.TT) offer quite a few QD/OLED models, along with more standard OLED and LCD models, while Samsung, maintains the lead, recently releasing the first 27” QD/OLED gaming monitor with a 500 Hz refresh rate (that unusually high refresh rate is particularly attractive to gamers who thrive on being able to see rapid screen movements without lag).  With this new high refresh rate QD/OLED monitor and other recent 27” QD/OLED entries, QD/OLED is expected to increase its share of the 27” OLED monitor market from 32% last year to 47% this year.
While OLED monitors overall are still a small part of the general monitor market, roughly between 1.4 and 1.5m units out of between 150m and 155m, over the last few years, QD/OLED has become the standard bearer for high-end gaming monitors, and their share of the OLED monitor market is expected to increase from 68% last year to 73% this year.  With  only one 30,000 sheet/month QD/OLED fab, SDC can either produce ~700,000 QD/OLED TVs or ~3m+ monitor panels.  With large panel OLED (TV) growth relatively slow and OLED monitor growth increasing, the likely higher per unit profitability on monitors than on TVs, it would seem that QD/OLED has found a new home.  With considerable room for QD/OLED technology improvement that can widen the gap between WOLED and QD/OLED, it seems a more comfortable home than the technology battles that rage between LCD, Mini-LED, QD, and WOLED in the TV space

​Yesterday we spent some time on how Samsung (005930.KS) has integrated AI into its just announced flagship Galaxy S Series smartphone line.  Aside from a lean toward on-device AI processing, similar to Apple (AAPL) Intelligence, there seem to be a concerted effort to move typical user physical tasks to the AI, particularly through voice control.  By this we mean by asking the AI to perform a task (“Summarize the transcript of the meeting I had with the marketing staff yesterday, write a cover letter, let me check it, and then send the cover letter and meeting summary to my Tier 3 e-mail list.  Send me a confirmation when its done”).  In terms of workflow, without the AI and the tight integration with Samsung applications, this would have entailed:

• Opening the app that recorded the meeting.
• Opening an app that could create a transcript of the meeting and creating and saving the transcript.
• Opening a word processor and loading the transcript.
• Editing the transcript into a summary and saving.
• Opening an e-mail app.
• Creating a cover letter.
• Defining the send list on the cover letter.
• Attaching the summary to the cover letter and sending
• Closing all apps.

In theory, if all of the applications were either Samsung applications or 3rd party applications that were able to access the AI API, the new workflow would be:

• Tell the AI what to do.
• Check the summary and cover letter and edit it if necessary.
• Do other stuff…

The AI is able to break your task down into its component parts and creates ‘agents’ to perform each part.  Because the AI is so closely integrated into the Samsung applications, the agents are able to open the necessary apps, perform their function, with the Ai directing the process.  The user does not have to open or close any apps or do any other work other than review, unless the summary or cover letter needs editing.  Note that we start the description of the ‘new’ workflow with ‘in theory’ as it is difficult to determine the actual level of AI/application integration until the phones are available for testing under Samsung’s 1UI 7 user interface.  We expect the level of integration might not be quite at this level yet but simplifying workflow, even a little, is what makes consumers think about upgrading.
The reason we continue to focus on Samsung’s level of Ai integration is because of Samsung’s upcoming release of its XR headset (aka ‘Project Moohan’ –( 프로젝트 무한 ) which translates to ‘Project Infinity’) seems to follow a similar path toward deep AI/application integration, particularly through its use of Android XR, Google’s (GOOG) new XR OS that will be used for the first time in the upcoming Samsung Moohan release.  While the details of Android XR are still sparse, the overall objective is to create a platform based on open standards for XR devices and smart glasses (AR) that uses existing Android frameworks, development tools, and existing Android elements (buttons, menus, fields, etc.), making it able to access all existing Android applications in a spatial environment. 
In a practical sense, it would allow existing 2D Android applications to be opened as 2D windows in a 3D environment, and with modification, can become 3D (Google is redesigning YouTube, Google TV, Google Photos, Google Maps and other major 2D applications for a 3D setting).  Android XR will also support a variety of input modes, including voice and gestures through head, eye, and hand tracking, and will support some form of spatial audio.
One feature of the Samsung XR headset that we believe will be well received is the visual integration with the AI.  Siri can hear what you say and can respond, but while it can ‘see’ what the user sees, it doesn’t have the capability to analyze that information on the fly and use it.  Meta’s headsets can hear what the user hears and perform a level of analysis for context, but that function is primarily for parsing voice commands.  Typically the Meta system does not access the camera information unless requested by the user and then takes a snapshot.  It is able to perform limited scene analysis (object recognition, lighting, depth, etc.) to allow for virtual object placement, but works specifically on the snapshot and only ‘sees’ what is in the real world, excluding virtual world objects. 
If the recent demo versions of the Samsung XR headset are carried through to the final product, the headset will hear and see, both real world and virtual objects, and analyze that information on a continuous basis.  This allows the user to say, “What kind of dog is that?” to the AI at any time and have the AI respond based on a continuous analysis of the user’s visual focus.  The user can also ‘Circle to search’ an object within view with a gesture, as the Ai also recognizes virtual objects (the circle) as well as the real-world data.  According to Google, the embedded AI in the Samsung headset also has a rolling ~10-minute memory that enables it to remember key details of the user’s visuals, which means you can also ask “What kind of dog was that in the window of the store we passed 5 minutes ago?” without having to go back to the store’s location.
We know there will be limitations to all of the features we expect on both the Samsung Galaxy S series smartphones and the Samsung XR headset, but, as we noted yesterday, Samsung seems to understand the concept that both the AI functionality and the user’s Ai experience are based on how tightly the Ai is integrated into the device OS and the applications themselves.  This desire has led them to work closely with Google and that allows users to use familiar Android apps, along with those specifically designed or remodeled for the spatial environment.  Hopefully they price it right at the onset, learning from the poor Vision Pro results, but we will have to wait a few more weeks to find out.

Samsung (005930.KS) announced its flagship smartphone line for 2025, the Galaxy S25 series today.  While the event detailed a number of hardware improvements, the real focus was on (not surprisingly) AI.  It seems that while Samsung continues to upgrade hardware to maintain a competitive stance against Chinese smartphone brands, we believe they understand that the incremental hardware improvements made each year are not enough to stimulate consumer to upgrade unless their phone begins to age out.  Foldables represent a new mobile category but due to their high price, volumes are relatively low, so it is essential that major brands maintain a flagship line to offset mid-range, lower margin lines.
There are times when hardware improvements can be a driver for consumers, as were OLED displays when they were new to the mobile world, and multiple cameras back a few years ago. But at this juncture, even OLED displays cannot be much larger and there is no new display technology on the near-term horizon that is appreciably different from what is available today.  Higher resolution cameras will always be possible as semiconductor technology improves, as will chipsets, CPUs, and GPUs, but other than foldables, mobile phone hardware will improve slowly and slowly does not excite consumers.
Smartphone software is in a similar position.  Smartphone applications have changed little over the past few years and do almost nothing to convince consumers to upgrade their mobile devices, but Ai for mobile devices is developing quickly and represents a platform where smartphone brands can compete and attract attention.  Ai does need processing power but Qualcomm (QCOM), Mediatek (2454.TT), Apple (AAPL), Google (GOOG), and Samsung continue to adapt their chipsets to the needs of AI, and while in the true sense, AI is a hardware-based system, on a mobile device it appears to consumers as software and requires relatively little hardware or mechanical changes or design restrictions.  However AI represents change and change in the CE market is something every marketing department looks toward to sell more devices.
Samsung seems to understand the fact that there are two AI’s.  One, answers your questions and interacts directly with users, while the other works silently in the background.  But they also seem to understand that the two should be working together and if there was anything to be taken away from the Samsung S25 event, it was that Samsung is interested in merging those two AI processes.  This not only improves the user’s experience with the phone but lessens the need for breakthrough hardware or software application improvement to attract consumers.  By leveraging Ai to allow applications on the phone to work together, the applications seem to be improved, even if they are not, and the ability of the AI to control or direct applications without the user having to open an application for each task is an improvement worth buying a new phone for.
Samsung’s multi-modal Ai allows the user to speak to the Ai directly (voice or even audio) and gives the AI the ability to create ‘agents’ that perform tasks that the user would typically have to do by pausing what they are doing to open a separate application.  Here’s an example.  The user is listening to a conference call which happens to be in Korean.  The Ai translates the call in real time but also compiles a transcript of the call.  When the call is finished the user tells the AI to summarize the call and reviews the AI summary.  The user tells the AI to change the 3rd paragraph to be more concise and reviews the change.  The user then tells the Ai to write a cover letter describing the circumstances of the call and to send the cover letter and the transcript summary to those in the ‘Level 2 Client’ list. 
Rather than having to open a number of applications to complete each part of the full task, the user either read or listened to the AI during each step and opened no applications.  The AI interfaced with the necessary applications and completed each task.  The system also gives the option to allow the Ai to collect information from other applications and devices in the Samsung ecosystem that can help it build a detailed profile of the user in order to make better or more personalized suggestions.
This can only happen when the AI is integrated into applications and Samsung has the advantage of having a recognizable enough brand that users are willing to use Samsung applications on its phones, along with a variety of externally developed applications.  Samsung offers external developers a number of tools to give them access to Samsung’s One UI 7, the user interface that sits on top of Android and provides the hooks to the AI, but there is nothing better than having that interface and the applications themselves developed in-house.  Only Samsung, Apple, and Google have the ability to tie their hardware and AI to such large application bases, with both Apple and Samsung concentrating on processing AI on device whenever possible.
As noted Samsung said all the right things about its AI at the Galaxy S25 event but everyday use can be much different from well produced event videos.  The Galaxy S25 family is now on pre-order and will be available in stores on February 7, at which point we should be able to get a better idea as to whether the phones live up to their marketing pitch.  The good news is that if they do, there is no premium being charged for the AI capabilities as the phones are priced the same as last year’s models, a plus for consumers.  Below we show only the differences between the hardware in the Galaxy S25 and last year’s Galaxy S24.

⁎ The 4th main camera (ultrawide) in the S25 Ultra is 50 MP f/1.9 while the 4th mani camera in the S24 is 12MP f/2.2.  The other three cameras are the same.
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