Google Advances Its AI Phone Agenda Against a Competitive Market of AI Phone Models

In August 2025, Google announced that its new Pixel smartphones will feature its in-house, custom-designed mobile chip, Google Tensor G5, made in partnership with Taiwan Semiconductor Manufacturing Company Limited (TSMC) for the first time, ending its longtime partnership with Samsung. In a bold move to become a leader in the Artificial Intelligence (AI) phone market, Google stated that its Tensor G5 chip can deliver improvements to computing power of up to 60% in its Tensor Processing Unit (TPU) and a Central Processing Unit (CPU) that runs 34% faster, on average, to optimize Google’s most advanced AI applications. The enhancements to CPU, memory, and storage interfaces enable the G5 chip to run the Gemini Nano model 2.6X faster and twice as efficiently as its predecessor, Tensor G4, for tasks like Pixel Screenshots and the Recorder app.

Externally, this move will have ripple effects across the device industry. For chipset manufacturers, the move away from Samsung Foundry signals a continued weakening of the company’s market share as it struggles against TSMC's growing dominance in 3 Nanometer (nm) semiconductor node technology. Google’s move away from Samsung was not the first instance of the foundry losing a major customer in recent times, as Qualcomm also shifted its flagship Snapdragon production to TSMC in 2022. Some of the key challenges Samsung has been facing include inadequate semiconductor design resources for Google G5’s custom silicon features, as well as advanced-node yield issues that have led to higher costs and potential supply constraints with Qualcomm. G5’s move to TSMC’s manufacturing line adds to the foundry’s list of significant clients, such as Apple, Qualcomm, AMD, NVIDIA, and others.

For consumers and other device manufacturers, the launch of the G5 chip in the Pixel 10 series represents another step forward in integrating AI into everyday handheld smartphones. With the debut of the G5 chipsets, the Pixel lineup delivers the most advanced on-device AI experience available on current smartphones, featuring real-time language translation, enhanced photography, and automatic call summaries—all designed to be processed on-device. Currently, the Pixel 10’s strength lies in the native AI that runs in the background on its phone. This enables notable use cases to run in parallel with the user’s daily interactions, without prompting or excessive user input. However, the G5 chip and Google AI on Pixel is not the first iteration of AI phones on the market; market leaders like Apple’s Apple Intelligence, Samsung’s Galaxy AI, and Xiaomi’s HyperAI have boasted similar high-performing chips capable of replicating some aspects of AI and integrating it into their phones.

With the potential for strong demand and adoption of AI-enabled smartphones looming, vendors must align their strategies and technological standards to encourage adoption in premium smartphones.

For device manufacturers, the year 2026 is expected to have a heavy emphasis on on-device AI features. Following major vendors like Samsung, Huawei, and Google’s announcements emphasizing onboard AI in their premium devices, the topic will be heavily scrutinized in the coming year as consumers and market observers evaluate its implementation. However, some key challenges will continue to plague AI phones’ potential if they remain unresolved.

First, sustained demand for new devices in the market depends on the consumer experience with the device and its ability to improve daily use, not on hype surrounding new hardware, such as chip upgrades. This means that while hardware improvements enable better software updates, demand will depend on how the software benefits users' daily activities, including productivity, creativity, and other factors. Currently, demand for AI on smartphones has been lackluster, as smartphone vendors have done little to convince consumers of the benefits of on-device AI, how privacy is prioritized, and how to integrate AI effectively, rather than treating it as just a “nice to have” feature.

Second, vendors aiming to disrupt the market share status quo with their AI-enabled smartphones need to focus on differentiation features, rather than standard features common across devices. As companies like OPPO, Nothing, and Apple have established niches through factors such as camera quality, design philosophy, and seamless user experience, vendors cannot rely solely on features like AI-enhanced photography, AI photo editing, AI text summarization, live translation, and AI-powered voice assistants. Capturing unique niches and differentiating in a highly mature premium smartphone market is essential to unlocking the demand potential of AI phones in the upcoming year.

Finally, AI phone adoption will continue to face obstacles due to consumers’ concerns about rising prices and subscription fees for already costly premium smartphones. This concern is a significant factor limiting adoption and demand, as excitement around a new phone launch quickly fades if consumers can't see how the features justify the higher costs or improve their daily lives. Vendors need to find a way to balance the inevitable price increase of AI smartphones with the phone’s unique value that can persuade consumers to buy them.