GFU Forecasts On-Device AI Will Revive Electronics Sales

GFU, the organization behind Berlin's IFA trade show, has released its annual market forecast for the consumer electronics industry. The key finding of the "Insights & Trends Forecast" report is that the shift of artificial intelligence from the cloud directly onto devices, rather than another wave of new services, is what will drive the next cycle of consumer hardware upgrades.

First-half numbers

The forecast's starting point is data from the first six months of 2026. Global revenue in the Tech & Durables category, excluding North America and Russia, grew nominally by 6.0 percent, to $430.5 billion. Adjusted for currency fluctuations, growth is more modest at 2.4 percent, but GFU stresses that this still beats the mood among some industry analysts earlier in the year.

Emerging markets grew the fastest. Asia excluding China posted 12 percent growth, while the Middle East and Africa region grew as much as 15 percent. More mature categories grew more slowly but still positively: small household appliances gained 5 percent, telecom goods 4 percent, and classic consumer electronics 2 percent.

A two-year outlook

For telecom equipment specifically, meaning mostly smartphones, GFU expects sales to grow 1.2 percent in 2026 and accelerate to 2.6 percent in 2027. The broader consumer electronics and IT hardware market, on the other hand, is expected to first shrink 0.8 percent this year before returning to growth of around 3.1 percent the following year.

According to GFU, this pattern, a decline followed by a clear rebound, is explained by the hardware replacement cycle. Consumers now hold onto their devices longer than they did a few years ago, but they're more willing to pay for tangible benefits, such as better performance or new features, once they finally decide to buy. The organization expects that AI-equipped hardware will become the main argument for upgrading devices in 2027.

AI as a market-wide layer

The guiding theme of this year's IFA is that artificial intelligence is ceasing to be a separate product category and becoming a layer present in nearly every device, from computers to home appliances. GFU points to three areas expected to drive growth in 2026: products with built-in AI, robots that assist with everyday tasks, and a new generation of wearables such as smart glasses.

Technology alone doesn't create progress. Its potential only emerges once people can understand it, try it, and shape it - Leif Lindner, Managing Director of IFA Management

AI PCs with dedicated NPU chips, which allow language models and image processing to run locally without a constant cloud connection, play a particular role in the forecast. GFU expects real-time, lag-free translation and advanced on-device photo and video processing to become standard in smartphones as early as 2027.

Chinese exhibitor presence grows

The scale of the trade show itself is growing alongside the market it describes. Last year IFA drew 1.9 million visitors from 140 countries, and this year's edition runs September 4-8 in Berlin. The number of exhibitors from China has grown from around 700 to more than 900, meaning they now account for close to half of all companies showing products at the fair, from AI-enabled home appliances to humanoid robots.

The market is stronger than the general mood would suggest. Growth is being driven by innovations that genuinely help consumers in their everyday lives - Carine Chardon, Managing Director of GFU

For European, including Polish, retailers and hardware makers, this means growing competitive pressure from Chinese brands, which are increasingly entering the market with AI-equipped products in lower price segments. GFU notes that it's precisely in these segments that the battle is now playing out for customers who had previously put off replacing their devices.

For Polish retail companies and electronics distributors, the GFU forecast carries practical weight for planning product ranges over the next two years. If the predictions hold, this year's decline in consumer electronics sales could prove temporary, with real demand for new AI-enabled hardware only emerging in 2027, once more manufacturers have brought models with mature NPU chips to market.

GFU cautions, however, that its forecasts assume a relatively stable macroeconomic environment continues. Currency fluctuations, which are already trimming real revenue growth from 6.0 to 2.4 percent, remain a risk factor, as does the pace at which manufacturers actually manage to move AI processing from data centers onto individual devices.