Phong Interpolation
Phong shading improves upon Gouraud shading and provides a better approximation of the shading of a smooth surface. Phong shading assumes a smoothly varying surface normal vector. The Phong interpolation method works better than Gouraud shading when applied to a reflection model that has small specular highlights such as the Phong reflection model.
The most serious problem with Gouraud shading occurs when specular highlights are found in the middle of a large polygon. Since these specular highlights are absent from the polygon's vertices and Gouraud shading interpolates based on the vertex colors, the specular highlight will be missing from the polygon's interior. This problem is fixed by Phong shading.
Unlike Gouraud shading, which interpolates colors across polygons, in Phong shading a normal vector is linearly interpolated across the surface of the polygon from the polygon's vertex normals. The surface normal is interpolated and normalized at each pixel and then used in a reflection model, e.g. the Phong reflection model, to obtain the final pixel color. Phong shading is more computationally expensive than Gouraud shading since the reflection model must be computed at each pixel instead of at each vertex.
In modern graphics hardware, variants of this algorithm are implemented using pixel or fragment shaders.
Read more about this topic: Phong Shading