ASUS Confirms Pause on New Smartphones as R&D Shifts to Physical AI and Commercial PCs

Overview

ASUS has confirmed a major strategic shift that will see the company stop introducing new smartphone models for the foreseeable future, redirecting its research and development resources toward commercial PCs and Physical AI technologies, including robotics and smart glasses.

The announcement was personally confirmed by ASUS Chairman Jonney Shih (施崇棠) during a company event in Taipei, marking a pivotal moment in ASUS’ long-term transformation as it positions itself for the next wave of the AI-driven industrial era.

ASUS Signals Strategic Pivot at Taipei Event

On January 16, ASUS held its year-end employee celebration at the Taipei Nangang Exhibition Center, an event that doubled as a platform for outlining the company’s future direction. While the gathering featured generous employee rewards, it was Shih’s pre-event media remarks that drew the most attention.

Shih confirmed that ASUS will no longer expand its smartphone lineup, stating that future R&D investments will be concentrated on business-focused PCs and Physical AI—a category that blends artificial intelligence with real-world hardware such as robots and wearable devices.

The move reflects ASUS’ intent to align itself more closely with what Shih described as the Fourth Industrial Revolution, where AI is embedded directly into physical systems rather than confined to software alone.

AI-Driven Growth Pushes Revenue Higher

Despite ongoing challenges such as geopolitical uncertainty and tariff pressures, ASUS reported strong financial performance driven largely by its AI-related initiatives. According to Shih, ASUS achieved NT$738.91 billion in annual revenue, representing 26.1% year-on-year growth.

Notably, ASUS’ AI server business doubled, achieving 100% growth and exceeding internal targets. The company’s event theme, “AI Leading the Way to the Future,” reinforced its broader strategy of integrating AI across product development, operations, and enterprise solutions.

Shih emphasized that future markets will be shaped by systems capable of self-learning and autonomous decision-making, urging employees to treat AI as a core foundation rather than a supplemental feature.

Zenfone and ROG Phone Face an Uncertain Future

The most closely watched topic was ASUS’ smartphone business. When asked directly about its mobile roadmap, Shih stated that ASUS will “no longer increase new smartphone models.”

While he noted that ASUS would continue to “take care of existing brand users,” he stopped short of committing to future releases—an answer widely interpreted as signaling a functional exit or indefinite suspension of ASUS’ smartphone development.

This places long-running product lines such as Zenfone and the gaming-focused ROG Phone in limbo, with industry observers suggesting that 2026 may mark the effective end of ASUS’ smartphone era.

Why ASUS Is Betting on Physical AI

Shih described the shift as a necessary response to a paradigm change in technology markets. ASUS plans to reallocate smartphone R&D talent toward higher-growth areas, including:

Commercial and enterprise PCs
AI robotics
Smart glasses and wearable AI devices

Analysts note that ASUS’ smartphone teams bring deep experience with Qualcomm platforms, making them well-suited to transition into development for Snapdragon X-based business laptops and Dragonwing-powered Physical AI devices. This technical continuity reduces friction while opening doors to higher-margin markets.

Supply Chain Pressures Could Affect Pricing

Shih also acknowledged ongoing memory shortages and rising component costs, particularly affecting non-AI products. While ASUS is exploring multiple ways to manage cost pressures, he admitted that price adjustments remain a possibility.

Regarding recent confirmation of a 15% U.S.–Taiwan tariff rate (non-cumulative), Shih said the outcome was positive but stressed that long-term competitiveness will depend on supply chain resilience and design efficiency, not tariffs alone.

Analysis: A Risky Exit or a Necessary Evolution?

ASUS’ retreat from smartphones may disappoint loyal fans, but from a business perspective, it reflects hard realities. The smartphone market has become intensely competitive, dominated by Apple and Samsung, with shrinking margins and rising development costs.

While Zenfone struggled to compete on ecosystem scale and camera leadership, and ROG Phone carved out a niche among hardcore gamers, neither line proved sufficient to justify continued large-scale investment.

By shifting its focus to Physical AI, ASUS is placing a calculated bet on emerging hardware categories that could define the next decade. If the company can translate the engineering excellence behind ROG Phone into AI glasses or intelligent robots, the end of its smartphone chapter may ultimately mark a strategic rebirth rather than a retreat.