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Err… That’s definitively AI.
AI is just any computer algorithm that does a task that would be aimed to require human intelligence.
Identifying text in an image is a non-trivial task, so OCR is a type of AI algorithm.
That said, I assume “AI phones” are probably not using the term AI in the general sense; presumably they just mean that it uses MM-LLMs somehow.
Just FYI, I’m pretty sure you’re confusing “AI” and “AGI”.
Even enemy behavior is videogames is “AI”, but obviously is not “General Intelligence”.
I think the problem is Hollywood confusing the two terms, so people think AI = Skynet, but that’s not the technical definition in Computer Science.