All of this is at stake following recent US sanctions against the Chinese tech champion. Consumers all over the world were already abandoning the brand because phones no longer come with some popular American apps. Now, a blow to its hardware supply chain is giving it an edge in the Chinese market on shaky ground.
The company will lose its supply of Kirin super fast, advanced starting chipets from next month because they are made by contract manufacturers using US technology, Huawei consumer business head Richard Yu said at a conference last week.
Losing a point of sale
Huawei should have enough Kirin chipsets to spend this year, said Nicole Peng, an analyst with market research firm Canalys. After that, the company is likely to return to MediaTek, another Taiwanese chipmaker. Will Wong, an analyst with IDC, said Huawei would still be able to buy that company’s chipset “off the shelf”.
But using standard MediaTek chips will erode Huawei’s competitive advantages when it comes to hardware, analysts said. The loss of the Kirin chipsets “will definitely affect the unique selling point” of Huawei smartphones, Peng said.
Kirin chips are specially created to power Huawei more expensive devices. They are faster and more advanced than MediaTek chipsets, and have better artificial intelligence, imaging and 5G capabilities, according to Peng. This is why Huawei uses them in flagship phones, such as its Mate and P models.
Being “unable to produce Kirin chips will create a great deal of uncertainty for him” [Huawei], especially for their high-end phones, “Wong said.” However, Huawei still has a strong national brand image in China, which is an excellent “promoter” for the company.
The advantage of the house
These rapid sales in mainland China, along with the downfall of rival Samsung, also helped Huawei overtake the South Korean company to become the world’s top smartphone seller.
Stores in China reopened earlier than other countries still struggling with the Covid-19 pandemic, helping boost Huawei sales. However, analysts say Huawei is likely to fall behind again as stores reopen and sales resume in other global markets.
With the company forced to rely on less powerful chips used by many of its domestic competitors, it is likely to lose its home advantage.
“These vendors will continue to expand aggressively as Huawei is weakening next year in China,” Peng said.