Samsung really wants to outsmart Apple in the Galaxy-iPhone battle

• Apple is preparing to supercharge iPhone with Apple Intelligence.
• Samsung is readying a counterattack with Galaxy AI.
• The South Korean company is about to reveal fresh AI features as it goes into battle with Apple. 

For more than a decade, the leaders of South Korea's grandest chaebol could take pride in their company's edge over Silicon Valley's most powerful smartphone maker.

From the city of Suwon, Samsung — the family-led titan of Korean industry — has been the world's top smartphone seller, beating Apple.

While Americans generally prefer iPhones, the rest of the world has preferred Samsung's Android-powered devices sold for competitive prices. However, all that changed last year.

By the end of 2023, Apple overtook Samsung for the first time in 12 years with a 20.1% share of global smartphone market, per figures published in January by data firm IDC.

In part, Samsung was hit by forces affecting the wider smartphone business. Shipments fell 3.2% in 2023 to 1.17 billion units, IDC found, suggesting consumers were less willing to upgrade, especially against a backdrop of higher inflation.

Samsung has also been grappling with difficulties closer to home.

Lee Jae-yong, executive chairman of its most important division, Samsung Electronics, and South Korea's richest man with a net worth of $11 billion according to Bloomberg, has been wrapped in bribery and financial crime scandals since the mid-2010s.

In 2017, he was found guilty of bribery involving then-president Park Geun-hye but was pardoned in 2022 after serving a short prison sentence. Earlier this year, in a separate case, Lee was acquitted on charges of stock price manipulation and accounting fraud.

With that drama now behind its leadership, Samsung is focusing on the sector's most important development in years: artificial intelligence and the new smartphone wars it's about to trigger with Apple.

Samsung gears up for the AI era

The South Korean company hopes all eyes will be on Paris on Wednesday as it prepares to reveal the "next frontier" of its AI ambitions at an event dubbed "Galaxy Unpacked."

The timing couldn't be more important.

Last month, Apple unveiled Apple Intelligence, a vision of generative AI that will give its devices a total refresh. In doing so, Apple hopes to inspire consumers to upgrade their iPhones so they can access its suite of AI features.

Such features include a revamped Siri, tools to boost emails and messaging, image creation support, and the integration of OpenAI's ChatGPT into the operating systems of iPhones, iPads, and Macs.

For Apple, which is facing tough competition in key markets like China, Apple Intelligence represents a huge bet that its take on AI will be so enticing to consumers that they're willing to upgrade their phones to gain access. (Only newer models like the iPhone 15 Pro and upcoming iPhone 16 line-up will offer Apple Intelligence).

For Samsung, it means needing to get serious about AI too. It debuted Galaxy AI, its first take on generative AI features for its devices, at the January launch of its flagship Galaxy S24 range.

Galaxy AI includes features such as "circle to search" from Google, which allows users to search for whatever they see on their screens, as well as live translator tools for calls and enhanced photo editing capabilities.

While Apple is pushing users to upgrade to new devices if they want to gain access to top AI features, Samsung appears to be taking a different approach.

Galaxy AI has already been rolled out to older phones, such as the S23 and Z Fold5, as Samsung aims to make its AI features as widely available as possible — as early as possible. That will give existing Samsung users a chance to assess the value of AI and buy another Samsung device when they next upgrade.

There are signs that Samsung is already making a comeback.

On Friday, Samsung Electronics estimated a huge boost in its operating profit to about 10.4 trillion won ($7.54 billion) for the second quarter, up from 670 billion won ($485 million) a year ago.

Samsung overtook Apple again in the first three months of the year as the world's top smartphone seller, per IDC figures, with the caveat that it was boosted by the launch of a flagship phone in a quarter when Apple did not launch a new phone of its own.

The South Korean company's hope now will be that its vision of AI keeps it on top of Apple for the entire year.

Samsung says Wednesday's launch is about entering "a new phase of mobile AI" — one it hopes will crown Samsung as king again in the smartphone's AI era.