AI is Trading the Cloud for Your Pocket, Starting with 1.5 Billion Smartphones

New Futuresource Perspectives report explores how AI hardware is reshaping smartphones, smartwatches and hearables markets

AI has moved beyond hyperscale infrastructure, datacentre buildouts and billion-dollar model training. In personal electronics, the emphasis is beginning to shift. According to a new Perspectives report from Futuresource Consulting, more AI processing is moving onto the device itself, changing the role of smartphones, smartwatches and true wireless hearables in the process.

“Edge AI is becoming one of the most important developments in personal electronics,” says Simon Forrest, Head of Core Technology at Futuresource Consulting. “Enhanced neural computational capability profoundly changes what devices can do, how quickly they can achieve it, and how intelligent they can become without relying on the cloud or accompanying devices for AI inferencing.  This is a fundamental hardware shift that is shaping the next generation of consumer electronics, which promises to enable more standalone personal electronics to proliferate.”

The NPU becomes a defining point of differentiation

At the centre of this shift is the Neural Processing Unit, or NPU, which is fast becoming one of the clearest indicators of how seriously brands and chipmakers are taking edge AI.

In smartphones, the race is already in motion. Futuresource notes that in 2025, flagship smartphone SoC vendors were quoting between 35 and 85 TOPS of NPU performance, with some newer platforms pushing towards 100 TOPS. That puts AI firmly at the centre of the smartphone silicon battle, as vendors compete to deliver more capable on-device AI experiences and embed new features.

Crucially, this is not entirely new territory.  Smartphone AI has already been powering on-device features such as virtual assistants, Face ID and computational photography, allowing images to be processed from multiple cameras and elements within those images to be removed or manipulated in near-real time.  In those cases, AI has enabled greater efficiency, privacy and responsiveness, with processing handled locally on the device rather than sent to the cloud.

That principle is now extending into more capable virtual assistants, offering live on-device translation, as well as small language models and generative tools for audio and video.  With around 1.5 billion smartphones shipped worldwide in 2025, the category provides an enormous installed base for AI-enabled experiences, one that device manufacturers, app developers and service providers are eager to tap into.

The AI ecosystem is widening

While the report identifies smartphones as the current centre of the universe for edge AI, smartwatches are beginning to add more capable NPUs of their own.  An example is Qualcomm’s Snapdragon Wear Elite, which has established a new baseline at 12 TOPS in 2026, and further untethers wearable devices from needing to rely upon AI in the smartphone.

In parallel, the report highlights how AI in true wireless devices is moving beyond simple voice triggers and into more sophisticated real-time functions including on-device translation and a far more capable generation of contextually-aware and proactive virtual assistants.  “We’ve been considering ‘audible AR’ and new untethered wearable experiences for several years now,” notes Forrest”.  “The addition of NPUs into devices such as true-wireless and AR glasses delivers the solid baseline in silicon necessary to propel this forwards, using AI-based algorithms to offer new features and capability.”

A more capable, more connected edge

What makes this shift significant is the growing possibility that personal electronics will become more autonomous, more private and more responsive, with less reliance on the cloud for every AI task. Futuresource expects that by 2030, smartphone NPU performance could have tripled from current levels, while smartwatch AI performance should at least double, opening the door to far more advanced on-device intelligence.

Futuresource Consulting’s free Perspectives: Edge AI in Personal Electronics report explores the silicon, device categories and performance benchmarks now shaping the edge AI opportunity.

About Futuresource Consulting

Futuresource Consulting provides the insights that power the world’s leading technology and media companies. For almost 40 years the firm has combined rigorous data, sector expertise and a forward-looking view of market change. Its syndicated research, consulting services and industry partnerships span consumer electronics, entertainment, Pro AV, education and emerging technologies.
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Press Contact: Nicola Finn, Head of Marketing and Communications, Futuresource Consulting, nicola.finn@futuresource-hq.com