The news: Samsung has overtaken Apple in smartphone shipments, but increasing competition is coming from China’s emerging smartphone sector.

• Samsung captured a 20.8% market share from January to March, eclipsing Apple’s 17.3% share, per IDC. 
• China-based Xiaomi, whose handsets aren’t sold in North America, has 14.1% market share.
• Global smartphone shipments in Q1 rose 7.8% YoY, totaling 289.4 million units. 

Why it’s worth watching: Q1 sales tend to favor Samsung, which launches models early in the year, while Apple traditionally earmarks September for new iPhones to capture holiday season sales. 

• Apple’s shipments dropped 10% in Q1, with 50.1 million iPhones shipped, down from the 55.4 million units during the same three-month period last year. 
• Competition is getting stronger from the likes of Xiaomi, Huawei, Oppo, and Transsion.

AI is not yet a factor, but it could be a distraction: The shift to on-device AI has not yet factored into the smartphone segment. That could change once Apple makes anticipated announcements at June’s Worldwide Developers Conference.

• Apple’s attention has been divided recently across a monumental AI pivot and its AR/VR aspirations, both of which have yet to be profitable. 
• Samsung has baked some AI features into its latest Galaxy devices and is the first Google partner to integrate access to Gemini Pro and Imagen 2 with Vertex AI on cloud for smartphones. 

The bigger picture: Intensifying competition from China’s smartphone makers reveals that there are growth opportunities in other countries and emerging markets as mobile technology and 5G expansion grows.

Intensifying smartphone competition could erode Samsung’s and Apple’s leads in emerging markets, where AI and premium devices are not a factor for adoption.