Samsung to Showcase Baidu’s Ernie AI in Latest Galaxy Phones

(Bloomberg) -- Samsung Electronics Co. will feature Baidu Inc.’s Ernie Bot as a key attraction of its new Galaxy S24 smartphone series in China.

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The South Korean maker has pitched its latest handset family as the first of a wave of AI smartphones, and Baidu’s artificial intelligence tools will help with text summarization, organization and translation, Baidu said in a statement. It will also provide the backend support for Samsung’s “circle to search” feature, which is handled by Alphabet Inc.’s Google in other markets.

Read More: Samsung Banks on AI to Lift Galaxy Phones to Best Sales in Years

Google’s Android software provides the backbone for the majority of smartphones in China, but the company’s add-on mobile services and app store are not available, leaving it to local companies to fill gaps with alternatives like Tencent Holdings Ltd.’s WeChat. For Baidu, the Samsung deal marks a major adopter of its Ernie AI, one of the earliest and best efforts to create a Chinese challenger to OpenAI’s ChatGPT.

Samsung’s market share has crumbled in the world’s largest smartphone arena in past years to roughly 1-2%, crowded out by Apple Inc.’s iPhones as well as local brands from Xiaomi Corp. to Huawei Technologies Co. Showcasing Ernie prominently might appeal to its millions of existing users, as the Korean company safeguards its global presence and tries to pioneer a new mainstream category with foldables.

What Bloomberg Intelligence Says

Samsung’s decision to use the Ernie large-language AI model for its forthcoming AI-powered Galaxy 24 smartphone model in China is an endorsement of Baidu’s position as a leading Chinese AI player for now. While positive for sentiment, we don’t expect a material financial benefit to Baidu given the collapse of Samsung’s once-leading market share in China handsets. We remain cautious on Baidu’s AI prospects and expect Tencent, Alibaba and Huawei to emerge as long-term victors in China’s AI sector.

- Robert Lea, analyst

Click here for the research.

(Updates with commentary in the fifth paragraph)

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