news

Source: Visual China

Author: An Ran

Editor: Ye Jinyan

Produced by: Deepnet·Tencent News Xiaoman Studio

Recently, a series of actions of Huawei mobile phones have shown that the shortage of Huawei mobile phones is a thing of the past.

First, the Pura70, which has just been on the market for more than three months, has started to reduce its price nationwide. Among them, the Pura70 Ultra version has a discount of 1,000 yuan, and the previously scarce model Pura70 pro 256GB version has also been reduced from 6,499 yuan to 5,699 yuan;

Second, Huawei no longer avoids talking about the manufacturing and process of Kirin chips. Richard Yu recently pointed out in Dong Yuhui's live broadcast room that Huawei's mobile phone chips are made in China, and some Huawei stores will also introduce the Kirin chips to users. In contrast, when the Mate60 was first launched last year, Huawei issued a regulation prohibiting stores from promoting 5G.

Data from third-party market research organizations also confirm that Huawei is regaining its lost ground in the domestic mobile phone market. According to Canalys statistics, Huawei has become the top mobile phone brand in China in terms of shipments in the first quarter of 2024 with a market share of 17%. According to BCI data, Huawei has ranked first in activation volume in the 17th week of this year (W17) with a market share of 20.25%.

However, these data have not been recognized by some of Huawei's core dealers. "Market research institutions count shipments, and the mobile phone inventory is overwhelming the dealers here," and "To judge whether Huawei's production capacity has recovered, you can see whether the smart life hall is still selling Huawei smart phones such as Maimang and Uchangxiang." Several Huawei dealers revealed to Shenzhen Net.

The domestic mobile phone market share in Q2 2024 given by IDC, Canalys, and Counterpoint respectively

In Q2 2024, against the backdrop of an overall decline in domestic mobile phone sales, although Huawei's market share has declined, it is still the fastest growing brand among the top five mobile phone manufacturers. On the one hand, market research institutions have given information that Huawei's mobile phones will soon return to the top of the domestic market, while on the other hand, channel dealers have doubts about mobile phone sales. Whether Huawei's mobile phone production capacity has recovered remains a mystery.

It is no secret that the Pura70 series has been reduced in price across the board. The author of Deep Web visited several Huawei flagship stores and found that the price reduction of the Pura70 series has been reflected on the price tags of the products in Huawei flagship stores. Regarding the price reduction of the Pura70 series, some supply chain personnel have reported that it is mainly because Huawei's production capacity has gradually recovered, but the sales of the Pura70 series are not as expected.

The price cuts for the Pura70 series and Mate X5 series have already appeared on the price tags of products in Huawei flagship stores.

However, a Huawei channel gave a different explanation to Deep Web about the price cut of the Pura70 series. "First, summer is the peak season for mobile phone sales, and the price cut is to seize this window of time; second, Huawei Mate 70 will be launched in the fourth quarter, and before launching new mobile phones, mobile phone manufacturers are selling out old mobile phones."

A channel dealer revealed that except for the Pura70 series, the Mate60 series in the secondary market and small stores such as mom-and-pop stores are all seeing price cuts.

"Mate60 is about to be discontinued and is entering the final stage. Huawei released a batch of Mate 60 series mobile phones to core manufacturers in mid-July. Before Huawei released the goods to major manufacturers, Mate 60 could be sold at the original price in the secondary market and small stores, or even with a premium of several hundred yuan. Now the price of Mate 60pro shipped by channel dealers to the secondary market has dropped to more than 6,000 yuan, which directly leads to losses for channel dealers." A channel dealer revealed to Shenzhen Net.

But what is quite strange is that Huawei's flagship store did not lower the price of the Mate 60 series. A store clerk also told the author of "Deep Net" that "the Mate 60 series is currently out of stock and there will be no price reduction."

On the one hand, Huawei concentrated on pushing goods to core merchants in July, and on the other hand, a clerk at Huawei's flagship store said that "the Mate60 series is currently out of stock." For ordinary users who are unaware of the situation, whether Huawei's mobile phone production capacity has recovered and whether the stock is sufficient is like a mystery.

An insider close to Huawei revealed to Shenzhen Net that there are two dimensions to judge whether Huawei's production capacity has recovered: one is whether the Mate 70, which will be launched in the fourth quarter of this year, has sufficient stock or is out of stock; the other is whether Huawei's Smart Life Center continues to sell Huawei's smart selection phones such as Maimang.

"Before 2020, Huawei stores were not allowed to sell other brands of mobile phones such as Maimang. After the chip bottleneck, Huawei's flagship stores and specialty stores were once faced with a situation where there were no new products and machines to sell, so they allowed channels to pick up Maimang and other Huawei smart products. If Huawei's mobile phone production capacity is fully restored, Huawei will not need to promote Maimang and other mobile phones in the smart life hall."

Maimang is a brand jointly launched by China Telecom and Huawei in 2013. After Huawei was sanctioned by external parties, Maimang became China Telecom's independent mobile phone brand. According to Deep Web's visit and observation, some Huawei smart life stores are still selling Maimang phones.

A Huawei channel dealer revealed to Shenzhen Net that "Maimang phones are mainly 'bundled' to channels. For example, when allocating Mate60 series, they will be asked to stock Maimang phones. If Huawei's low-end mobile phones have restored 5G, offline channels such as smart life halls will not need to sell smart products such as Maimang."

In the low-end mobile phone market of around 1,000 yuan, Huawei has the Enjoy brand. In May 2024, Huawei launched the low-end Enjoy 70S, equipped with Qualcomm Snapdragon 680 processor (4G). A channel dealer revealed to Deep Net that "Huawei Enjoy phones are not easy to sell. The same 1,000 yuan mobile phones, vivo, OPPO, Xiaomi, Honor, etc. are all 5G versions, with similar prices, why do users buy 4G phones."

As the production yield and capacity of Kirin chips are still in the climbing stage, many of Huawei's mobile phones are still 4G.

"Due to the limitations of the chip supply chain, many of Huawei's current mobile phones are 4G phones. For example, the nova 12 Vitality Edition is equipped with Qualcomm Snapdragon 4G chip, and it accounts for more than 50% of the nova12 series inventory." An informed source revealed to Deep Net.

The key to returning to the top position in China

"If Huawei can also restore 5G in the low-end mobile phone market, then Huawei mobile phones will not be far from returning to their peak." Several Huawei core channel dealers predicted to Shenzhen Net.

The speculation of Huawei's channel dealers is not without reason. The leading domestic mobile phone brands have a consensus that impacting the high-end is the goal, and low-end mobile phones are the basic plate of the domestic mobile phone market.

According to IDC data, from 2019 to 2023, high-end mobile phones priced above US$600 (about RMB 4,400) accounted for 13.7%, 18.2%, 23.2%, 23.7%, and 27.4% respectively, while mid- and low-end mobile phones priced below US$600 accounted for 86.3%, 81.8%, 76.3%, and 72.6%.

According to Deep Web, apart from the Vision and Nova Vitality Editions, Huawei's current mobile phone sales are mainly concentrated in the market for mobile phones priced above 4,000 yuan. According to Canalys data, Huawei's mobile phone shipments in Q1 and Q2 of 2024 will be 11.7 million and 10.6 million units respectively, or 22.3 million units in half a year.

What does it mean to sell more than 20 million units in half a year? Richard Yu, executive director of Huawei, chairman of the Device BG, and chairman of the Intelligent Automotive Solutions BU, once revealed in an interview with Dong Yuhui that "Huawei's worst month in the past (in 2019) was more than 20 million units."

Earlier media reports said Huawei aims to ship 60 million to 70 million smartphones in 2024. According to statistics from a third-party research organization, in the first half of 2024, Huawei only achieved one-third of its planned target.

Since low-end and mid-range phones are the basic market of the domestic mobile phone market, if Huawei wants to return to the top of domestic sales, it needs to launch 5G phones in the low-end mobile phone market to boost sales. However, an industry insider close to Huawei revealed to Deep Net that "Huawei has clearly stated that it will not launch 5G phones below 3,000 yuan this year."

The industry insider explained to Shenzhen Net that due to the cost and mass production issues of core components, Kirin chips may be supplied first to flagship models such as Mate60Pro, Mate X5, and pura 70.

"For cost and profit considerations, Huawei mainly promotes higher-priced flagship mobile phones. For example, the Mate60Pro+ (ITB) mobile phone, which was initially priced at 9,999 yuan, has always been in sufficient stock, but the Mate 60 mobile phone with a price of 5,499 yuan and 256GB capacity was once in serious shortage." A Huawei channel dealer revealed to Shenzhen Net.

The promotion of high-end mobile phones has indeed increased the market share of Huawei's high-end mobile phones. In Q1 2024, in the domestic high-end mobile phone market above US$600, Huawei's mobile phones ranked second with a market share of 26%, behind Apple (54%) (Canalys data). However, under the general trend of polarization in the global mobile phone market, mid- and low-end mobile phones are the markets that Huawei mobile phones must focus on and consolidate in order to return to the top.

"Under the overall economic downturn, consumers today continue to show a two-tier differentiation trend when choosing mobile phones. For example, some users will still choose to upgrade their products, purchasing high-end products or large-storage versions to extend the replacement cycle; while other users will choose to reduce the price of products, purchasing mid- and low-end products." IDC China Research Manager Guo Tianxiang analyzed to "Shenwang".

Can the new Hongmeng “boost” sales?

Compared with the 142 million units shipped by Huawei in China in 2019 (IDC data), the sales volume of more than 20 million units in the first half of 2024 is indeed difficult to say that Huawei's mobile phone production capacity has recovered. But it cannot be denied that Huawei's mobile phones are indeed the biggest variable in reshaping the domestic mobile phone market this year.

In terms of chip performance, an insider revealed to Deep Web that "there is still a 2-3 generation gap between Kirin chips and high-end chips from Qualcomm and MediaTek."

Regarding the Kirin chip manufacturing process, Huawei's executive director Zhang Pingan once publicly stated: "We will definitely not get 3nm (nanometers), and we will definitely not get 5nm. It would be great if we can solve 7nm."

However, Yu Chengdong has also publicly stated, "Our semiconductor process may not be so advanced, but we use software to make up for hardware, and through our system solution design to improve the experience and performance of the whole machine, pure-blooded Hongmeng can improve device performance by 30%."

According to Yu Chengdong, "the new Hongmeng operating system (HarmonyOS NEXT) will be commercialized this year and will start trial use in August. The Mate 70 to be launched in the fourth quarter of this year will be equipped with the new Hongmeng system."

"The new Hongmeng is by no means a replacement for Android or iOS. Developing Hongmeng native applications is not simply rewriting the code, but redesigning the user experience." said Gong Ti, president of Huawei Terminal BG Software Department.

The Hongmeng operating system was first released on August 9, 2019. "The purpose of promoting the establishment of Hongmeng within the software department is not to replace Android and iOS mobile operating systems, but to target IoT devices," Wang Chenglu, former president of Huawei's terminal BG software department and head of Hongmeng system (who has resigned from Huawei), once revealed to Deep Web.

After being sanctioned by external parties, Google suspended its cooperation with Huawei in software, hardware and technical services, which directly led to Huawei phones being unable to update the Android system. On June 2, 2021, Huawei announced HarmonyOS 2, which can cover mobile terminals such as mobile phones, and officially installed the Hongmeng system on smartphones.

An industry insider analyzed to Deep Web, "It is not difficult for mobile phone manufacturers to make their own OS. The difficult part is whether they can build an ecosystem on the OS and form a self-contained ecosystem. If the ecosystem is solved, plus their own frameworks and tools, plus the underlying kernel, it will be a complete operating system solution. Currently, only Hongmeng system has truly built an ecosystem."

In terms of ecology, public data shows that Hongmeng has started development of more than 5,000 commonly used applications, and more than 1,500 have been put on the shelves.

In comparison, in 2019, Google Play had more than 2.6 million APP applications and iOS applications had more than 2.1 million. If Huawei wants to increase sales by relying on the operating system and share the world with Apple and Android, it still needs to expand and improve the application ecosystem.