The 2024 International Consumer Electronics Show (CES) has witnessed a wave of AI terminals.
In 2023, the global emergence of generative artificial intelligence, represented by large models, sparked a “Battle of the Models,” with AIGC applications on the verge of an explosion. By 2024, as large AI models further integrate, discussions in the PC industry revolve around how to make AI technology universally accessible in the terminal domain, ensuring an evolving experience for ordinary users.
At this year’s CES, major chip giants like NVIDIA, Intel, and AMD competed to unveil new products upstream in the industry chain. In the terminal domain, AI PCs (Artificial Intelligence Personal Computers) became a crucial focus for the industry. Companies like Lenovo, Dell, HP, and Acer launched a variety of new devices and solutions based on artificial intelligence.
“It’s like the PC industry 24 years ago,” remarked Liu Jun, the China region president of Lenovo, who arrived in Las Vegas the night before. Around the year 2000, Lenovo introduced computers with a one-click internet access feature, marking a boundary where the internet opened up an entirely new world for PC applications. Liu Jun stated that AI PCs this year are initiating a similar revolution, elevating PC usage and penetration, stimulating the growth of the PC market in the coming years.
The Year of AI PCs
Returning to CES after a four-year hiatus, Liu Jun expressed that this year feels “even more vibrant than four years ago.” Observing the new products at the PC booths, many overseas users showed considerable interest.
“At last year’s CES, our exhibits focused more on performance updates for existing PCs, but this year, AI has revolutionized the entire PC industry,” mentioned a PC exhibitor at the Venetian Resort in Las Vegas.
During this CES event, Lenovo Group stood out as a dominant player in the AI PC race. The company showcased over 40 new devices and solutions based on artificial intelligence, including more than 10 AI PC products. These AI PC products range from thin and lightweight PCs made of magnesium alloy to the Yoga Pro 9i, assisting users in creative processes like document creation and graphics. Additionally, there’s the ThinkBook Plus Gen 5 Hybrid, seamlessly switching between a laptop and tablet mode.
Apart from Lenovo, Acer introduced new AI PC products, covering Swift series and Aspire Vero16, targeting consumer-level users. HP also announced updates to its flagship 2-in-1 laptops, Spectre x360 14 and Spectre x360 16, featuring the latest Intel Core Ultra chips designed to assist in handling AI tasks. HP has also incorporated AI technology into the camera applications of these new products.
The significant development of generative artificial intelligence and large language models has fundamentally altered the interaction between individuals and intelligent terminals like computers. Based on on-site experiences reported by First Financial Journalists, users can now perform various functions through computer dialogue boxes by simply inputting text-based descriptions. This includes configuring computer settings, summarizing and searching for document content, and creating graphics. Moreover, in online meetings on computers, if a user in front of the camera needs to step away to answer a phone call, clicking the “leave” function enables AI to create a lifelike video of the user still present in the camera frame, making it challenging to distinguish between reality and simulation.
With the continuous implementation of AI PCs, the ecosystem of the PC industry is expected to undergo some changes. An industry professional mentioned that in the traditional PC ecosystem, users interact with applications mainly through general-purpose computing CPUs and graphics processing GPUs, with the operating system controlling several aspects. In the era of AI PCs, users interact more with AI entities, large models, and AI-native applications. Hybrid computing power becomes indispensable as AI PCs redefine productivity and accelerate the self-iteration of the PC industry ecosystem.
Competition in the Upstream of the Industry Chain
The dominance of AI PCs at CES is indicative of intense competition in the upstream of the industry chain.
Currently, major computer brands unveiling AI PC products at CES generally adopt Intel’s latest Core Ultra processors to support AI applications. Earlier, HP, Dell, Lenovo, Acer, and Asus had expressed their plans to launch new AI PCs synchronized with the new CPU product roadmap of Intel and AMD (Advanced Micro Devices).
It was reported that Intel released the latest Core Ultra chip on December 15, 2023. The company aims to push AI into PC terminals, leveraging its influence among downstream OEM manufacturers to strengthen its competitive edge and target the pain points of rivals.
AMD also introduced new products expanding its desktop product lineup just before CES. This includes the AMD Ryzen 8000G series desktop processors, equipped with the Ryzen 7 8700G graphics card, and the introduction of a dedicated AI neural processing unit (NPU) into desktop processors with Ryzen AI.
From the perspective of the industry chain, in response to the development trend of the PC industry and a significant improvement in AI capabilities at the terminal, leading chip manufacturers upstream are actively working to integrate dedicated AI acceleration blocks (NPU) into CPUs. Considering development experience and mature products, only a few major companies like Intel, AMD, and Apple possess the relevant technology. Under the wave of artificial intelligence, Nvidia, dominant in the field of computing power, does not hold the core technology. This implies that Intel and AMD are opening up new tracks beyond Nvidia’s dominant GPU position.
During CES 2024, Intel CEO Pat Gelsinger explicitly mentioned AI PCs in his keynote speech, comparing AI PCs to WiFi. He stated, “Since then (WiFi popularity), the world has changed. Twenty years later, we will view AI PCs like we view WiFi today. I believe it will change the user interface, and we will see it (AI) and talk to it (AI) with our eyes on the computer, rather than typing to it (AI).” Gelsinger expressed his vision.
Since taking over at Intel, Gelsinger has been hoping to revitalize the company’s declining business in the personal computer market during a period of low demand. He had predicted that the shipment scale of AI PCs would reach 100 million units within the next two years.
Anticipating a Turning Point for PCs
According to a research report by Canalys, in 2024, the proportion of AI PCs in PC shipments will be close to one-fifth (20%). By 2027, due to the momentum of replacements and a completely new local experience, this proportion is expected to rapidly grow to over 60%. Compared to consumers, businesses will more actively adopt AI technology, with 60% of AI PC shipments being applied in commercial fields by 2027.
Additionally, during CES 2024, executives from several computer brands expressed optimism about AI PCs. HP President Alex Cho mentioned, “AI PCs will allow users to run large language models on devices without the need for internet access. This brings various features like low latency and privacy protection. I believe office applications will be the killer application for AI PCs.”
Microsoft’s Vice President of Windows Chips and System Integration, Pavan Davuluri, stated, “I think we are seeing a future world where AI works across applications, services, and devices; it is your life’s agent. This is good for consumers.”
However, it’s essential to note that behind the introduction of AI PC products by various companies, the PC industry has just experienced a challenging year of market softness.
Previously, driven by factors like remote work and online education due to the global pandemic, the PC market witnessed explosive growth, reaching near-record highs in global PC shipments in 2021. However, the market soon faced oversupply issues, with channels accumulating significant inventory. Many chip companies and PC manufacturers collectively encountered challenges of declining performance. As of the third quarter of 2023, the PC market had experienced eight consecutive quarters of decline.
The industry is hopeful for a turning point to arrive, with the catalyzation of AI PCs prompting users to shorten their device replacement cycles, accelerating the arrival of a replacement wave.
“Overall, there is great enthusiasm globally for AI PCs,” said Luca Rossi, Executive Vice President of Lenovo Group, at CES. “If I were to make a bold bet: the acceptance and product acceptance speed in China will be faster. The speed in other markets will be similar, especially in Europe and the United States.”
According to IDC’s predictions, in the next five years in the major consumer markets focused on individuals and families, the average unit price of AI laptops will be between 5500-6500 yuan, and AI desktop computers will have an average unit price of around 4000 yuan. Meanwhile, the assembly ratio of new AI PCs in the Chinese PC market is expected to rapidly rise in the coming years, reaching 85% by 2027, making it the mainstream of the PC market.