ASUS exits smartphone market as chairman confirms AI-first strategy over Zenfone and ROG phones

ASUS Confirms Exit from Smartphone Development

ASUS Chairman Jonney Shih has officially confirmed that the company will "no longer add new mobile phone models in the future," marking a definitive end to the development of Zenfone and ROG phones1

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. Speaking at the company's 2025 Year-End Gala at the Taipei Nangang Exhibition Center on January 16, Shih announced that ASUS is temporarily halting new smartphone launches to fully redirect its R&D resources toward AI-driven products3

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. While the chairman stopped short of declaring a permanent exit, the language used and the scale of the strategic shift suggest that the pause may become indefinite1

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The decision ends speculation that began earlier this year when reports first emerged about ASUS pausing smartphone development. Shih emphasized that the company will continue to support existing smartphone users with after-sales services, software updates, and warranty coverage, though internal measures are still being finalized5

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. However, smartphone retailers and distributors in Taiwan will no longer be able to obtain ASUS handsets, signaling a complete withdrawal from new device distribution5

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Why ASUS Exits Smartphone Market Now

ASUS believes the smartphone market no longer offers the growth potential needed to justify continued investment, especially when compared to opportunities in AI hardware1

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. Jonney Shih pointed to severe challenges facing the smartphone industry, including slowing smartphone demand, supply chain constraints, and memory shortages that have driven up RAM prices5

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. These pressures are putting particular strain on "non-AI products" while market competition continues to intensify5

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The company once thrived by serving niche users with specialized devices like gaming-focused ROG phones, but that strategy has lost momentum over time2

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. ASUS struggled to keep pace with larger rivals on software support, marketing scale, and competitive pricing as buyers began upgrading less frequently2

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. Shih indicated the company would only reassess its position if market conditions changed dramatically, though such a shift appears unlikely given current trends2

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Strategic Shift Toward Physical AI Devices and Commercial PCs

ASUS shifts focus to AI with a comprehensive reallocation of resources previously dedicated to smartphones. The company is now betting heavily on AI-powered commercial PCs, robotics, and AI smart glasses as part of what Shih calls the "Fourth Industrial Revolution"4

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. The gala event was themed "AI Leading the Future," with leadership encouraging staff to embrace this "once in a lifetime" opportunity under the marketing strategy of "Ubiquitous AI. Incredible Possibility"4

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Shih emphasized that the future will be filled with "artificial brains" possessing self-learning abilities, and ASUS must push AI to its limits to evolve both product innovation and operational processes4

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. The company is specifically targeting Physical AI devices, including AI robots and robotics applications alongside AI smart glasses, which reportedly offer greater growth potential than smartphones5

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AI Servers Drive Revenue Growth Beyond Expectations

The financial rationale behind this paradigm shift becomes clear when examining ASUS's AI server performance. The company's server business reached a milestone of over NT$100 billion in revenue ahead of schedule last year4

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. Originally, ASUS estimated that AI servers would account for around 10-15% of total revenue, but unstoppable demand has driven those numbers far higher4

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In Q3 2025, ASUS's server revenue increased more than 100% year-on-year, now making up approximately 20% of the company's total revenue4

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. The company operates around 2,200 server centers globally through its flexible manufacturing layout, enabling it to provide customized and end-to-end services4

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. Shih expressed confidence that this infrastructure positions ASUS to lead in the emerging AI hardware landscape.

What This Means for Tech Industry and Smartphone Users

The decision to discontinue new smartphone models represents one of the most significant exits from the Android ecosystem by a major manufacturer in recent years. For existing ASUS smartphone owners, the company has pledged to maintain comprehensive after-sales support, though the long-term viability of software updates remains uncertain as development teams are reassigned5

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. The move also eliminates competition in the gaming phone segment where ROG devices had carved out a dedicated following.

Looking ahead, ASUS's aggressive pivot illustrates how rapidly AI is reshaping technology company priorities and resource allocation. The company's willingness to abandon an established product line signals its conviction that AI hardware represents a fundamentally different opportunity than iterative smartphone improvements. Whether ASUS can successfully compete against established players in AI robotics and commercial PC markets will determine if this strategic shift delivers the growth potential Jonney Shih envisions, or if the company has prematurely abandoned a stable revenue stream for an uncertain future in an increasingly crowded AI hardware space.