Currently, Huawei's global smartphone shipment sits at less than 30 million units annually. Can it return to its previous peak of 200 million units? The answer to this question is likely something Huawei's smartphone supply chain is speculating as well. The recent marketing approach of the Mate 60 Pro, which began sales before any official announcement was made, is likely just the starting point for Huawei's "long-term comeback" over the next few years.
According to data from DIGITIMES Research, Huawei's global smartphone shipments peaked at 218 million units in 2019 but soon plummeted to just 19.4 million units by the end of 2022.
Citing industry sources, Chinese media revealed that Huawei has recently revised its annual smartphone shipment target for 2023. Initially set at 30 million units at the start of the year, it has been raised to 40 million units. Achieving this YoY growth target of over 40% poses a significant challenge for Huawei.
However, the surprise online launch of the Mate 60 Pro by Huawei on August 29, albeit in a limited quantity, marked the official surfacing of the domestic replacement initiative in China's semiconductor sector. The Mate 60 Pro is described as the representative of China's domestic chips. Despite that, Huawei has not disclosed the localization extent of the Mate 60 Pro, leaving room for speculation. Is this a smoke screen, or is Huawei saving a big reveal for its announcement in September?
In some way, this also reflects the ongoing shift from globalization to regionalization. The Mate 60 Pro has many technical limitations that make it unlikely to achieve large-scale mass production. Huawei is likely well aware of this and won't be relying on this one smartphone to save China.
Nevertheless, it has been three years since TSMC stopped supplying HiSilicon in September 2020 due to US restrictions. In those three years, Huawei gradually replaced the key chips within the Mate model with domestic alternatives. Reports by Chinese media in July stated that the Mate 60 Pro could encounter production capacity issues. Additionally, its performance may not immediately match the 2023-2024 flagship models of major foreign brands in terms of specifications.
With limited production capacity and weak performance, the impact on its competitors may not be significant. Even with the nationalism-driven, emotional purchases by Chinese consumers, the effect will still be limited.
On the flip side, if Huawei can achieve a full replacement within three years and replicate products that are on par with foreign brands, it will not only be a concern for the US government that issued these restrictions but also for the wider global supply chain and major brands. To some extent, has Apple become a victim of the US export control policies?
According to reports from securities firms cited by Chinese media, the promotion of "domestic replacement" has always been a "not openly announced" focus within Huawei's smartphone business. Huawei's Mate 60 Pro is equipped with a 6.82-inch OLED screen and a domestically-made Kirin chip. The launch of this new model is expected to inject new demand into the sluggish consumer electronics market and encourage users to upgrade their devices, thus driving the growth of the overall consumer electronics industry.
The HiSilicon Kirin chip equipped on the Mate 60 Pro also reflects the domestic replacement trend in China's semiconductor industry as they face restrictions from foreign countries. The continuous breakthrough and development of local chip technology as well as the domestic replacement efforts from both upstream and downstream suppliers, have reduced the reliance on imported technology and ensured the stability and self-controllability of the local supply chain.
From this perspective, the launch of Huawei's Mate 60 Pro, regardless of its mass production scale and cost ratio, is further verification of the viability and competitiveness of Chinese domestic chips as a replacement option. This will also further advance the domestic replacement progress of semiconductor materials and components.
