Caixin
Oct 31, 2020 06:01 PM
BUSINESS & TECH

Huawei Launches What May Be Its Swan Song High-End Phone in Home China Market

Embattled Huawei Technologies Co. Ltd. unveiled its latest flagship smartphones, the Mate 40 series, for the Chinese mainland, even as models were set to be in short supply and could be the last from its premium line due to U.S. sanctions.

The four new Mate 40 models, ranging from 4,999 yuan ($747) to as much as 12,999 yuan, all use chips from Huawei’s self-designed Kirin series with 5-nanometer technology. Three went on sale Friday in China.

But Huawei fans may find it difficult to buy the new phones due to limited supply. On Friday night, the first batch was sold out shortly after being put up for sale online. Other batches were released over the weekend, and buyers could also register online for specific models and wait for an “invitation” to place an order.

Huawei is doing “everything it can” to solve supply problems, Richard Yu, head of the company’s consumer division, said at a Friday event in Shanghai. “After three rounds of U.S. sanctions, many of our products are out of stock, and many people are asking me whether the consumer business can survive. I tell you that no matter how difficult it is, we will keep the business going.”

The same phones were unveiled in Europe last week, the first release after the company was formally cut off from major chip suppliers under a successive wave of U.S. sanctions targeting both American and non-American chipmakers. Overseas orders for the Mate 40 phones have exceeded supply and Huawei is ramping up production, Yu said at the event.

A series of U.S. moves have banned all U.S. and non-U.S. companies capable of making chips needed for Huawei’s high-end phones from supplying those chips to the company. After the latest bans announced in May and August took effect, Huawei can neither produce its Kirin chips using contract chipmaker Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) nor buy off-the-shelf chips from chipmakers such as Qualcomm Inc. and MediaTek Inc.

The sanctions’ impact led to a 22% year-on-year drop in Huawei smartphone shipments in the third quarter, as the company lost its title of world’s top smartphone maker to Samsung Electronics Co. Ltd., according to new data released on Thursday by market research firm International Data Corp. (IDC).

Some chipmakers saw a rise in their third-quarter revenue as Huawei bought large volumes of chips before a U.S. ban took effect on Sept. 15 barring all sales by third-party chipmakers using American technology. Taiwan’s MediaTek reported its third-quarter revenue rose 44.7% year-on-year to a record high NT$97.3 billion million ($3.4 billion), with its net profit nearly doubling.

MediaTek estimated its revenue would drop up to 8% in the fourth quarter compared with the third as Huawei’s orders vanish. But the company said losing Huawei as a customer would not have a big impact on its business because many other companies on the Chinese mainland also produce 5G phones.

“China's 5G smartphone market is huge and we previously estimated that sales of 5G phones in China in 2020 would reach 120 million to 130 million,” CEO Rick Tsai said at a Friday briefing.

Huawei is believed to be rationing its current supply of chips due to the finite amount and its inability to obtain more. At the same time, it is also rapidly pulling back in markets outside China since U.S. sanctions forced it to cut ties with Google, maker of the Android operating system that powers most of Huawei’s phones. While Huawei continues to install a free version of Android, it can no longer include popular Google programs like the Google Play app store or Gmail on any of its new phones.

As its smartphone business tails off, it is turning to other consumer equipment aimed at offsetting some of the losses. At the Friday event, it unveiled several new products such as a wireless headset, smart watch, and smart speaker.

Demand in China is large for such devices, as well as TVs, so Huawei’s next task will be to update its stores nationwide to let staff become familiar with such products that can fill some of the void created by falling smartphone sales, Zhu Ping, the consumer division’s Greater China president, told reporters after the event.

The company also is making efforts to create a “not made in America” supply chain that doesn’t require any U.S.-made technology, with a target date of 2022 or earlier to reach that milestone, Caixin previously reported. That supply chain will be incapable of making the cutting edge-chips that power Huawei’s highest performance smartphones, though it could produce chips for many of its other products.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Yang Ge (geyang@caixin.com)

Download our app to receive breaking news alerts and read the news on the go.

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code