All of that is now at risk following the latest US sanctions on the Chinese technology champion. Consumers around the world have abandoned the brand as the phone no longer ships with some of the popular US apps. Now, a blow to their hardware supply chains is making their advantage in the Chinese market wobble.
The company will lose supplies of cutting-edge, super-fast Kirin chipsets when it starts from next month, as they are manufactured by US technology contract manufacturers, Richard Yu, head of Huawei’s consumer business division, said at a conference last week.
Loss of selling point
Nicole Peng, an analyst at market research firm Canalys, said Huawei should have enough Kirin chipsets to make it through this year. After that, the company may switch to MediaTek, another Taiwanese chip maker. Will Wong, an analyst with IDC, said Huawei can still buy chipsets “sold by” that company.
But MediaTek’s use of standard chipset will undermine Huawei’s competitive advantage when it comes to hardware, analysts said. Peng said the loss of the Kirin chipset “will definitely affect the unique selling point” of Huawei smartphones.
Kirin chips are specifically designed to power Huawei’s more expensive devices. They are faster and more advanced than MediaTek’s chipset and have better artificial intelligence, imaging capabilities and 5G, according to Peng. That’s why Huawei uses them in flagship phones like the Mate and P models.
“Not being able to produce Kirin chips creates great uncertainty for.” [Huawei], especially for their high-end phones, “Wong said. However, Huawei still has a strong national brand image in China, which is a big driver “for the company.
Rapid sales in mainland China, coupled with the decline in rival Samsung, have also helped Huawei overtake the Korean company as the world’s top seller of smartphones.
Stores in China reopened earlier than in other countries still struggling with the Covid-19 pandemic, helped boost Huawei’s sales. However, analysts claim that Huawei is likely to fall behind again as stores reopen and sales continue in other global markets.
With the company forced to rely on less powerful chips that many of its domestic competitors also use, it could lose its home advantage.
“These suppliers will continue to expand strongly, while Huawei is weakening next year in China,” Peng said.