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Published on Sep. 18, 2026

Artificial intelligence is altering competition in the smartphone industry. This was evident in September when Huawei, Xiaomi, and Apple launched new premium phones in a whirlwind 72 hours.

The hardware grabbed most of the headlines. On September 7, Huawei introduced its tri-fold Mate XT 2, which unfolds into a tablet-sized screen, and starts at 19,999 yuan (around US$2,950). Hours later, Xiaomi released the Xiaomi 18 Fold, priced from 10,999 yuan (about US$1,620). Apple then launched the iPhone Duo, its first foldable iPhone, starting at 15,999 yuan in China (about US$2,360). This marked the first time the three industry giants competed directly with foldables in the same premium price range.

All three companies emphasized AI in their presentations. “This season's launches show that top smartphone makers now compete on a ‘system level’ involving foldable designs, in-house chips, and AI agents,“ wrote Jingji Cankao Bao on September 11. (in Chinese)

Some observers, like commentators writing for the Chinese-language site of Japan’s Nikkei, see Chinese phone companies leading in AI. Huawei's agents perform tasks like translation, photo editing, and restaurant bookings via voice, reported Nikkei's Chinese site. (in Chinese)

Apple, however, cannot yet offer Apple Intelligence on iPhones in China, but incoming Apple CEO John Ternus branded the iPhone as "an intelligent personal hub" in his keynote for other global audiences.

For users, AI phones promise convenience. They can fill a shopping cart with gifts based on stored data about the recipient, like reminding a father or mother about the preferences of a daughter while searching for a birthday present. Some features also enhance security. HarmonyOS 7 detects AI-modified voices and fraudulent sites, according to Huawei. Some incoming fraudulent calls can be detected, too.

A fully autonomous phone remains elusive. Brands are cautious due to incomplete safety standards, analysts such as Gong Chao at Tongji University said. "AI agents will drive the future smartphone market, but uncertainty looms," he said.

Two strategies emerge. One places an AI company's agent on a partner's phone, like ByteDance with ZTE's Nubia NaviX Ultra, launching soon. The other integrates the agent into the operating system. Honor's MagicOS 11 will be the first to deploy "a true system-level Agent Harness layer," according to Honor. Apple, Xiaomi, and Huawei are on similar paths.

A language model can converse, but on a smartphone it needs a harness to act. Booking or ordering requires software that provides memory, tools, and permissions. The operating system manages these because it sees the screen, receives notifications, indexes content, and controls app actions.

The harness dictates how an agent interacts with apps. ByteDance's assistant mimics human taps, an works with any app that does not security alerts. This is arguably the simplest way to integrate AI on a phone. Apple and Huawei make apps specify permissible agent actions, a more stable approach. On HarmonyOS, Tencent Video lets Huawei's agent pass queries to the app's AI.

With memory chips currently scarce, IDC forecasts a 16.7% drop in global smartphone shipments in 2026 compared with 2025. In this environment, foldables are emerging as a bright spot. They are among the few smartphones that command prices above 10,000 yuan (about US$1,500). "Recent launches centered on foldables, chips, and AI agents indicate a shift from value competition to innovation," Pan Helin, an expert at the Ministry of Industry and Information Technology in Beijing, was quoted as saying.

A larger screen alone, foldable or not, does not justify sky-high prices in the long run. "A bigger screen offers more display space, while AI reduces user steps. Together, they could make foldables a new type of computing device," wrote Pengpai Xinwen.

For that mission, powerful chips are essential. "We have strong CPUs, GPUs, and NPUs for on-device AI," said Richard Yu of Huawei at the launch of the Kirin 9050 Pro, its new flagship chip for smartphones. An NPU, or neural processing unit, specializes in AI computations, so AI tasks run faster on the device, keep data on the phone, and work without a network connection.

Huawei claims the Kirin 9050 Pro runs a model with 30 billion parameters, activating only 2 billion at a time. Xiaomi has invested 21 billion yuan (about US$3.1 billion) in its chips since 2021. Chips are increasingly defining user experiences.

The Chinese phone maker Honor has made AI its central strategy. In March 2025, it pledged to invest more than US$10 billion in five years to become an “AI ecosystem company.“ “It is clear that the AI revolution will reshape the paradigm of the device industry,” said Honor CEO James Li.

AI agents will be the new "super entry point" for mobile e-commerce. In China's internet industry, the entry point is where users start searching, buying, and paying. An agent that books or pays decides which app, merchant, and payment provider gets the business.

China's superapps are currently fighting a losing battle to defend their entry points. When ByteDance launched a prototype phone with Doubao in December 2025, users were logged out of WeChat. Taobao, Meituan, Alipay, AutoNavi, and JD.com also disabled logins, wrote Vivian Toh of TechTechChina for Nikkei Asia. Superapps hold identities, payments, and data, and resist outside agents. Their motive is commercial, with security serving as an argument that is hard to refute.

Alipay, one of the apps blocking Doubao, is currently developing its own AI wallet agent. Agent commerce has reached a pivotal moment, said Ant Group CEO Han Xinyi at the “Inclusion Bund Summit”. He called it the “ChatGPT moment“ for AI agents. With security crucial to earning consumers’ trust, 50 companies in the electronics industry have recently formed a working group on trusted AI identities. including Alibaba, Huawei, Xiaomi, Lenovo, and Qualcomm.

For brands, retailers, and advertisers, the rules of sales and marketing are changing. When an agent shops, product data, prices, and delivery terms must appeal to software before a human sees them. Chinese consumers experienced this during the Spring Festival when Alibaba's Qwen app handled bubble tea orders, as this briefing reported in February.

Whoever controls the phone's AI agent will influence where online purchases begin.