China rebuilds smartphones around AI agents as ZTE's NaviX Ultra sells out in hours

Chinese Smartphone Manufacturers Bet on Agentic AI to Reverse Declining Sales

Chinese smartphone manufacturers are rebuilding the smartphone around AI agents in a bold attempt to revitalize the struggling smartphone market. At the World Artificial Intelligence Conference in Shanghai this weekend, ZTE showcased the NaviX Ultra under its Nubia brand, positioning it as the world's first agentic AI smartphone 1

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. The device runs ByteDance Doubao, China's massively popular AI chatbot, and can be activated through voice commands or a dedicated button 2

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. Available in four colors—black, pink, white, and blue—the NaviX Ultra was prototyped in December at 3,499 yuan ($516), and the initial production run of 30,000 units sold out quickly, with used models trading at roughly twice the original price 5

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StepFun and Honor Join the Race for AI Agent Smartphones

ZTE wasn't alone in showcasing AI-powered smartphones at the conference. StepFun, a Shanghai-based AI startup, unveiled the STEPX Neo, an AI agent-native smartphone featuring a proprietary operating system with a built-in agent called Amoo 1

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. StepFun's chairman Yin Qi announced that "deep partnerships" had been established with major Chinese platforms including Alipay and ride-hailing giant Didi, enabling the smartphone to provide one-stop support for travel bookings, everyday purchases, local services, office productivity, and video editing 3

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. Meanwhile, Honor, the smartphone maker spun off from Huawei, showcased its "Robot Phone" with an AI agent co-developed with Alibaba that will ship on new devices later this year .

Autonomous Task Execution Across Apps Defines New Approach

The core innovation behind these AI smartphones lies in their ability to execute autonomous task execution across multiple applications rather than simply stacking isolated AI features onto existing interfaces. "Many so-called AI phones on the market simply stack AI functions on top of an existing system," said Nubia chief Ni Fei. "That actually makes it more cumbersome for users" 1

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. These agentic AI devices are designed to handle tasks like ordering food, comparing shopping prices, real-time photo editing, map creation, and travel planning through simple voice commands 2

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. On-device models handle frequent tasks requiring low latency, while cloud-based systems process more complex requests 5

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Platform Restrictions Pose Major Challenge to AI Agent Functionality

Despite the promise of agentic AI, platform restrictions remain a significant obstacle. When ByteDance released the Doubao Phone prototype in December, tech giants including Alibaba, Tencent, and JD.com restricted the built-in assistant's access to their platforms within days 2

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. The move effectively disabled the phone's AI agent, forcing ByteDance to turn off the powerful tool in certain circumstances, including when payments were involved 3

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. Kiranjeet Kaur, associate research director at IDC, explained that platforms want to keep direct contact with their users, otherwise "they lose control to another party." She added, "Agenting is everyone's dream, but we haven't reached there yet," noting that the performance of AI agent tools is still often patchy 2

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. According to Chinese tech media, the NaviX Ultra does not attempt to force its way into apps but rather seeks to collaborate with them 3

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Declining Smartphone Demand Drives Urgent Innovation

The timing of these launches reflects the urgent need to address declining smartphone demand. China's smartphone shipments have fallen for five consecutive quarters as the memory crisis pushed component costs up and consumer demand down 1

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. IDC expects the global smartphone market to post its steepest annual decline on record in 2026 1

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. According to Counterpoint Research, global smartphone sales fell to their lowest second-quarter level in 13 years as manufacturers passed the increasing cost of memory components onto shoppers, with total shipments declining by 11% year over year in the second quarter 4

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. Chinese manufacturers, many of which sell budget devices with thin margins, are being squeezed hardest, making AI smartphones their primary escape route 1

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Market Expectations and Competition with Apple Intensify

IDC's Arthur Guo predicts that more than half of China's smartphone market could be dominated by AI smartphones in 2026 1

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. The launches also deepen competition with Apple, which recently received Beijing's approval to roll out Apple Intelligence in China through partnerships with Alibaba and Baidu 1

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. "In terms of AI smart devices, we are ahead of Apple," Ni said on Weibo in June 1

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. Outside China, companies like Google are infusing smartphones with increasingly advanced AI features, while US startup Brain Technologies launched an agentic "Natural AI Phone" in Japan in April in partnership with SoftBank Corp 2

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Digital Economy Transformation Looms as App-Based Usage Faces Disruption

Marc Einstein of Counterpoint Research noted, "There is no clear winner in this race yet, which is why it is currently quite a hot topic." However, he predicted that in five or 10 years, we won't be using apps on our phones "like we do today," adding that "this will fundamentally change the digital economy and disrupt business models" 3

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. The shift away from traditional app-based usage could reshape how consumers interact with their devices and how companies monetize digital services. Yet challenges remain, as evidenced by struggles in the AI hardware space. Humane AI Pin launched in April 2024 at $699 and was discontinued less than a year later, with returns surpassing purchases. Rabbit R1 sold 100,000 units following its CES 2024 unveiling but faced extensive criticism after failing to match demonstration promises 4

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. Whether an agent that books flights and edits photos is enough to make people replace a device they already own remains the critical question the market will answer by year's end 1

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