The $3,000 Huawei device is China’s foldable iPhone competitor
Huawei Technologies Co. and Xiaomi Corp. are intensifying competition in China’s smartphone market just days ahead of Apple Inc.’s initial entry into the foldable segment. On Monday, Huawei introduced the latest iteration of its high-end trifold device, the Mate XT 2, featuring two distinct folding mechanisms. A successor to the Mate XT released two years ago, the new device raises both engineering complexity and price, now set at 19,999 yuan, reflecting an increase of approximately 10%. The company’s consumer business chief Richard Yu indicated that the increase in costs is partly attributable to the escalating challenges associated with procuring memory. In yet another indication of the memory supply constraints affecting specifications, the Mate XT 2 – which operates as a standard smartphone that can expand into a 10.2-inch tablet – is equipped with 16GB of memory and 256GB of storage in its most basic version, amounts that are rather modest for a premium offering. The new foldable is significant for ushering in Huawei’s LogicFolding chip design philosophy, with its Kirin 9050 Pro processor being the first silicon to be developed under that program.
Huawei’s semiconductor chief He Tingbo revealed earlier this year an alternative strategy for developing advanced semiconductors, designed to circumvent US-led restrictions that limit the company’s access to sophisticated lithography equipment. Ahead of the launch of the trifold phone, He published a paper dismissing concern that its technology would lead to overheating and said the new chip has significantly reduced power consumption. “The chip was cooler than its predecessor while comprising 55% more transistors per square millimeter and delivering as much as 66% power reduction on some key tasks,” He wrote in the paper. The Mate XT 2 is set to be available for purchase in China starting Saturday. Later in the evening, the Xiaomi 18 Fold will signify another advancement from a Chinese manufacturer toward enhanced self-sufficiency. The new handset will utilise memory from domestic leader CXMT Corp. and is powered by Xiaomi’s proprietary Xring O3 processor. It also showcases a passport-like design that reflects the anticipated appearance of the inaugural foldable iPhone from Apple.
The defensive manoeuvring by two leading Chinese brands highlights both the threat and the opportunity posed by Apple’s foray into the niche yet premium foldable market. Anticipated to be priced above $2,000, the foldable iPhone is set to draw renewed focus to this category of devices, which have been marketed for years by Chinese manufacturers and global shipments leader Samsung Electronics Co. In China, foldables have emerged as a notable area of strength amidst a generally contracting market. “Apple has the world’s biggest premium device installed base. Its foldable will sell well and rapidly grab market share,” analyst Ivan Lam said. He anticipates that the new handset will catalyse broader consumer adoption, generating spillover effects that enhance demand for competing devices as well. Xiaomi’s profit has experienced a decline for three consecutive quarters as the company has focused on reducing shipments of unprofitable low-end devices. Huawei, while continuing to experience growth in shipments, reported a decline in profits during the first half, partly due to the necessity of stockpiling additional components to mitigate the impact of increasing memory costs.
Huawei has aligned with Xiaomi and Honour Device Co. in implementing a new series of price increases, as reported by local media outlet Jiemian earlier this month. Smartphones are poised to experience their most significant contraction on record this year, with shipments expected to decrease by 14%, according to data. Chinese smartphone manufacturers are significantly affected due to their substantial reliance on budget devices, which are the least equipped to absorb the rising costs of components. In response to the prevailing economic pressures and to enhance profit margins, a significant number of brands are increasingly focusing their marketing efforts on their premium product lines, including foldable devices. Exiting a few days prior to Apple’s highly anticipated product event on Wednesday allows brands the opportunity to capture the spotlight, if only for a brief period. Apple could capture a quarter of the global foldable market this year and secure the top position with a 41% market share next year, as projected by Smart Analytics Global.
