Motorola, Google Drive Foldables Growth in North America as Market Expands 28% in 2025

14+ years: Liz Lee is an Associate Director at Counterpoint Research with 14+ years in the tech industry, formerly at Samsung SDI focused on investor relations and insight-driven analysis of emerging tech markets and corporate strategy; she holds an International MBA from Waseda. 17 years: Gerrit Schneemann has 17 years covering telecoms and consumer electronics with deep coverage of the global smartphone market and prior roles at iSuppli, IHS/Markit, Omdia and a brief stint at GfK Boutique.

Analysis

Near-term smartphone volumes are still cycling through inventory correction, but the structural story shifting upgrades from incremental hardware bumps to on-device AI capability creates a differentiated winner set among component suppliers. Expect a two-phase dynamic: 0–6 months of ASP compression and promotional share battles as retailers clear inventory, then 6–18 months of an upgrade wave concentrated in mid/high tiers where vendors can credibly market local generative-AI features — this will push ASPs and software monetization for leaders by an incremental 5–15% relative to baseline.

Second-order supply-chain effects matter: pockets of destocking will pressure camera-module and mid-tier OLED suppliers first, while foundry demand for NPU-optimized SoCs concentrates revenue upside at advanced-node suppliers and tool vendors. That creates asymmetric returns — smaller ODMs and commodity-module vendors face margin squeeze and consolidation risk, while node-levered players capture outsized margin expansion even if unit growth is muted.

Key near-term catalysts to watch are (1) major OEMs’ marketing cadence for on-device AI at their next product launch (0–3 months) and (2) first-carrier-led bundled subscription rollouts tied to AI features (3–9 months). Tail risks include China macro stimulus or aggressive subsidy programs that could reflate volumes and abruptly lift losers, and geopolitical foundry restrictions that would re-price advanced-node scarcity in weeks rather than quarters.

Consensus is underestimating software-led monetization: services revenue tied to AI features lifts high-end lifetime ARPU more than a one-time hardware upgrade, favoring vertically integrated OEMs and premium SoC suppliers. The near-term market is likely over-discounting this pathway, creating a window to accumulate concentrated exposure to the handful of suppliers that can capture both silicon premium and recurring software revenue.

Key Decisions for Investors

• Long QCOM (6–12 months): buy a 6–12 month call or 1–2% notional long-equity exposure. Rationale: premium on-device AI SoCs and modem integration should lift ASPs and OEM take-rates. Target +30–40% upside if adoption accelerates; stop-loss -20% on product-share misses or MediaTek share wins.
• Long TSM (12–24 months): accumulate 1–3% position in TSM via stock or a modest call spread to capture advanced-node demand. Rationale: foundry revenue capture from AI-optimized mobile SoCs; exit/trim on signs of rapid capex normalization or geopolitical export constraints. Target +25–35% over 12–24 months; tail risk is geopolitical disruption that could erase gains quickly.
• Pair trade (3–9 months): long AAPL (AAPL) vs short Xiaomi (1810.HK) sized 1:1. Rationale: Apple better positioned to monetize on-device AI via services and carrier bundles, less exposed to Chinese destocking and price competition. Take profit at +25% relative outperformance; risk if China stimulus or aggressive price cuts reflate Xiaomi volumes (stop at 15% relative loss).
• Long ASML call spread (9–18 months): buy a 12–18 month call spread to limit premium cost and capture sustained tool spend. Rationale: even modest increases in advanced mobile NPU share lift capital intensity for foundries. Reward skewed (20–40%+ on realized tool cycle); downside limited to option premium if AI mobile cycle underwhelms.