Apple's Huawei war, Qualcomm is very hurt?

Written by | Cao Shuangtao

Edit | Yang Bocheng

Title map | IC Photo

The price of the new iPhone 15 continues to fall.

On September 22, the iPhone 15 series of new machines officially sold for the first time, and the market heat on that day did not decrease. On the online e-commerce platform, within one minute of the opening of Apple's Tmall flagship store, the first batch of iPhone 15 Pro and iPhone 15 Pro Max were sold out. Taobao hot search data shows that the popularity of new iPhone 15 series products on Taobao Tmall soared by 512% within a week, and the popularity continued to rise.

At the same time, platforms such as JD.com, Meituan, and Hema are participating in the ultra-fast delivery. Jingdong home data shows that after the official debut of the iPhone 15 series today, as of 10 a.m. on September 22, the sales of the iPhone 15 series on the platform increased by 253% compared with the iPhone 14 series.

Offline, Beijing Xidan store, Shanghai Qibao store, Wuhan Wushang Plaza store, Chengdu Taikoo Li and other Apple self-operated stores, on the day of the first sale, were still crowded with many consumers who came to buy new machines.

Behind the seemingly popular, the new iPhone 15 series is losing its premium ability. Du Ming (pseudonym), an iPhone scalper from Huaqiangbei, Shenzhen, told DoNews that the day before the official release of the iPhone 15, the standard version did not need to be increased in price, and the official website could be purchased directly. The Pro version and Pro Max version increase the price from 2,000 yuan to 3,000 yuan.

On the day of sale, behind the crowd of Apple's own stores, many consumers sold the new machines purchased to scalpers. And because the iPhone 15 is compared to the iPhone 14, the overall innovation is limited. Coupled with the continuous hot sales of Huawei Mate 60 Pro in the current market, and Huawei's autumn new product conference will continue to amplify the moves, which makes many Apple scalpers worry that the new opportunity of the iPhone 15 series will fall into their hands, so they dare not recycle at a high price.

Among them, the first sale of single-day iPhone 15 basic version they directly do not charge, Pro version and Pro Max version compared with the 21st recovery price directly reduced by 1,000 yuan. On September 23, the recovery price of Pro and Pro Max continued to fall by 300 yuan to -500 yuan on the basis of the 22nd, and they did not charge for the Pro blue series.

Du Ming went on to say that the highest premium for the iPhone 14 Pro Max last year reached 2,000 yuan. But according to this year's situation, the iPhone 15Pro Max can be up to 400-500 yuan in the future, and now doing Apple's new machine scalper business is simply not as good as a year. At present, people in the circle have also turned their attention to Huawei, after all, Huawei Mate 60 Pro is the "hard currency" in the market.

As Du Ming said, at present, on many e-commerce platforms such as Douyin, Pinduoduo, and Taobao, the iPhone 15 series standard version is basically based on spot sales, which is in sharp contrast to the previous iPhone series standard version that had to wait for several weeks before it could be shipped.

Source: Douyin, Pinduoduo, Taobao

Unlike the new iPhone 15 series of new machines, although Huawei Mate 60 Pro has been sold for more than a month, it still has a certain premium ability. It is reported that the official website of 12GB+1TB Huawei Mall costs 7999 yuan, but on platforms such as Jingdong and Xianyu, the price of this model has also risen to more than 9,000 yuan.

Source: HUAWEI Mall official website

As the competition between Huawei and Apple in the high-end mobile phone market continues to heat up, it will also constitute a new round of impact on Qualcomm's performance.

Apple's Indian factory is dragging down iPhone 15 sales

The iPhone 15 series is not only mediocre in the mainland market, but also in the international market. Taking the iPhone 15 producer India as an example, according to India's "Business Today" report, the iPhone 15 is priced at 79,900 rupees (about 7,028 yuan) in India, which is not only higher than the 66,000 rupees of the same price in the United States, but also higher than the 77,000 rupees in Dubai.

The reason for this situation is that although the iPhone 15 series is produced in India, key core components can only be imported, and there are high tariffs, coupled with the continued weakness of the rupee price, which ultimately raises the overall cost and selling price of the iPhone 15 series. This is also a strong expectation difference with the previous Indian consumers thinking that the iPhone 15 series is produced at a lower price in India, which in turn has led to many Indian consumers' low willingness to buy the iPhone 15.

According to Bloomberg, European countries began to boycott the iPhone 15 due to concerns about the quality of the iPhone 15 produced in India. In fact, the concerns of these countries in Europe are not unfounded.

Due to the relatively late start of India's own precision manufacturing level, coupled with the weak supply chain and infrastructure of the country, the quality stability of the iPhone 15 produced in India is also a mystery. Domestic media reported that the sampling pass rate of iPhone mobile phones produced in India is only 73%, and the yield rate is 50%, but the sampling pass rate of the same batch of mobile phones in the European market is only 34%.

According to the Financial Times, Apple's quality department rejected about 50% of Apple's mobile phone cases produced in India. According to four insiders familiar with the company's operations, the Apple factory was built with the help of product designers and engineers from California and China, but did not provide any training to local employees.

In addition, on many social media around the world, the first batch of iPhone 15 users who have received goods said that the first batch of iPhone 15 has many quality control problems, including bumps on the bottom, paint on the fuselage, scratches on the screen, cameras that cannot be opened normally, and lens dust.

Source: Douyin

The imbalance of quality control will also continue to impact the sales of the iPhone 15. Although according to India's "Business Today" report, industry insiders have denied the news that India-made Apple mobile phones are exclusively for the EU market, sources close to Apple also deny that China-made iPhone 15 is only for the European and American markets. But the problem is that the yield rate of India's iPhone 15 is difficult to improve in the short term, and Apple is also facing the practical problem of how to coordinate and plan production capacity.

More importantly, today's Apple is no longer the Apple of the year, are users really willing to wait a few months to receive the iPhone 15 after payment? And according to the current pace of Huawei, it is inevitable to regain the lost market share in the global smartphone business, and Apple will also fall into a passive position.

At the same time, the "rotten" Cook has continued to decline in new Apple users in recent years, and can only rely on a large number of fruit fans accumulated in the Jobs era to support Apple sales. However, the imbalance of quality control will not only make the proportion of new Apple users continue to decline, but also constitute a backstab for fruit fans. Whether they are still willing to support other series of new iPhone machines in the future is still debatable.

Source: Above Avalon

Based on this, many institutions have lowered their expectations for iPhone 15 sales. Among them, UBS Securities lowered the shipment of Apple's iPhone 15 series from 80 million to 90 million to 78 million. Analysts at Haitong International Securities lowered the production forecast for the iPhone 15 series to 77 million units from 83 million.

CINNO Research predicts that the sales of iPhone 15 series models in the Chinese market in 2023 may be about 10 million units, compared with the previous generation of iPhone 14 series sales in the same period of sales fell 22%, a decrease of about 2.9 million units.

Second, Apple VS Huawei chip dispute

In contrast to iPhone 15 sales less than expected, many institutions have raised their expectations for Huawei Mate 60 Pro sales. Among them, Guo Mingxi, an analyst at Tianfeng Securities, said that Huawei's Mate 60 Pro shipment forecast in the second half of 2023 has been raised by 20% to about 6 million units due to better-than-expected demand. There are also reports that shipments of Huawei Mate60 Pro and Mate60 Pro+ have been raised to 20 million units.

From the follow-up point of view, Huawei's smartphone sales are still expected to continue to increase. Affected by the chip incident and Huawei's mobile phone not supporting 5G, Huawei could only seek cooperation with Qualcomm at that time. According to data given by Guo Mingxi, Huawei purchased 23 million to 25 million mobile phone SoC chips from Qualcomm in 2022, and the purchase volume will increase to 40 million to 42 million in 2023.

With the success of Huawei's self-developed Kirin chips, the subsequent procurement of Qualcomm chips will inevitably be gradually reduced. According to Guo Mingxi, Huawei expects that new models starting in 2024 will fully adopt Kirin processors.

But on the other hand, Apple, Qualcomm has said that by 2023, the baseband chips purchased by Apple from Qualcomm will drop to 20% of its demand, and Apple will use internally developed 5G modems from 2024. However, a few days ago, Qualcomm announced that it has reached an agreement with Apple to provide Snapdragon 5G modems and RF systems for smartphones launched in 2024, 2025 and 2026. Judging from the three-year cooperation signed by Qualcomm and Apple, the time for Apple's self-developed products will also be delayed.

Not only Apple, although since this year in order to compete for the market share of high-end mobile phones, OV, Xiaomi, Honor and other mobile phone manufacturers have launched large folding screen and small folding screen mobile phones. Taking Honor as an example, the Magic V2 large-folding screen mobile phone launched by Honor in July weighs only 231g. Launched in September, the V Purse is its first flip-out mobile phone, which claims to be no more than 9mm thick.

However, at present, the high-end flagship phones of domestic mobile phones are mainly equipped with Qualcomm chips, rarely self-developed chips, and even OPPO directly disbanded the self-developed chip team in April this year. OPPO Find N3 uses the Snapdragon 8Gen2 chip, benchmarking the Xiaomi 14 of the iPhone 15, and it is rumored that it will be equipped with the Snapdragon 8Gen3 chip.

In fact, behind this choice of mobile phone manufacturers is related to the high investment of the chip industry, and the industry has not yet come out of the winter. However, Huawei's self-research success in chips will continue to expand its share of high-end mobile phones, but also constitute a new round of impact on other mobile phone manufacturers.

It is reported that Huawei's self-developed chips make its cost controllable, if Huawei actively chooses to reduce the price for some high-end flagship models in the future. Apple, including other Android phone manufacturers, is limited by the cost pressure given by Qualcomm chips to whether to follow up and reduce prices, here is still debatable.

Not only that, although at present, including Apple and Android mobile phone manufacturers have regarded large models as new growth points for smartphones. However, compared with Huawei chips and Pangu large models, which are mainly self-developed, they can better combine the two, and it is still unknown when other mobile phone manufacturers can truly land the two.

Compared with other mobile phone manufacturers, Honor's impact on the market share of high-end mobile phones may be greater. When Huawei sold Honor, Honor took away a lot of dealer teams from Huawei. Nowadays, with the continuous increase in sales of Huawei Mate60 Pro and the high premium brought by high-end mobile phones, it is not ruled out that many honor dealers will choose to return to Huawei's arms in the future.

With the subsequent change in the market share of high-end mobile phones, Qualcomm's performance will also be directly affected. Previously, Qualcomm gave Huawei a single Snapdragon 8Gen2 chip with a price of 1100 yuan. Even if factors such as subsequent chip price increases are not considered, it means that Qualcomm will lose tens of billions of yuan in revenue.

Apple, and other domestic mobile phone manufacturers in response to Huawei's competition, can only passively reduce the production capacity of the high-end mobile phone market, and its purchase of Qualcomm chips will gradually decrease. Guo Mingxi expects that Qualcomm's shipments of Chinese brand mobile phone SoCs in 2024 will be 50 million to 60 million fewer than in 2023, and are expected to continue to decrease year by year.

Third, will the Kirin chip spill over to other scenarios?

In addition to the impact on mobile phone chips, the current market is worried that according to Huawei's internal cross-selling style and the gradual iteration of the subsequent Kirin chip functions, will it spill over to more scenarios in the future, and then constitute a new round of impact on Qualcomm's revenue in other chip businesses.

Taking the new energy vehicle scenario as an example, Qualcomm launched its first-generation chip product Snapdragon 602A for intelligent cockpits in 2014, using 28nm process, equipped with computing, storage, and display units, and can synchronously support 4 cameras and 3 screens, and at that time, smart cars were still in the early days, and the demand for intelligent cockpits was not high. In 2016, Qualcomm released the second-generation cockpit chip Snapdragon 820A using the 14nm process, and was installed on some new forces and traditional car models.

In 2019, Qualcomm launched the third-generation cockpit platform, the main chip 8155 adopts 7nm process, and the AI computing power is 8TOPS. Coinciding with the wave of automotive intelligence, Qualcomm 8155 has become an important competitiveness and publicity selling point for various car companies, especially the intelligent cockpit of mid-to-high-end models. For example, Wei Xiaoli, United Auto, Extreme Krypton, and Zhiji's vehicle intelligent chips are all equipped with Qualcomm series products.

Source: Northeast Securities

However, if Huawei subsequently spills the Kirin chip into the vehicle-machine intelligent system, Huawei has previously carried out in-depth cooperation with many car companies, and Huawei will synchronize the capabilities of the Pangu model. At this time, what choice will new energy vehicle manufacturers make between Qualcomm and Huawei?

It is worth noting that according to Qualcomm's previous financial report for the third fiscal quarter of 2023, Qualcomm's revenue in Q3 decreased by 22.7% year-on-year, and the profit margin plummeted by 51.7%, and the revenue contributed by the Chinese market to Qualcomm reached 64%. Therefore, how to find a new revenue growth curve in the Chinese market will also be a problem that Qualcomm must face.

Although since the beginning of this year, with the continuous advancement of the hundred model war, the demand for AI chips in the market has gradually increased. However, NVIDIA occupies 82% of the global data center AI acceleration market, and monopolizes the global Al training market with a market share of 95%, becoming the biggest winner in this round of AI melee.

From the follow-up point of view, it is not easy for Qualcomm to get more growth on AI chips. On the one hand, open source models represented by LIama2 have been released one after another, and enterprises only need to use simple AI inference chips to complete the training of large models, which has led to the weakening of demand for AI chips in the market.

On the other hand, in the field of AI chips, Huawei's advantages are also emerging. For example, Liu Qingfeng, chairman of iFLYTEK, said that Huawei's GPU technology capabilities are now comparable to NVIDIA A100, and have now achieved benchmarking against NVIDIA A100. Based on various concerns in the market, Qualcomm's stock price has continued to fall since August this year.

Source: Snowball

Epilogue:

Whether it is Qualcomm, Huawei, Apple, or any company, with the continuous change of the current consumer market, the emergence of new technologies, its growth process will not be smooth, but how to find certainty in uncertainty, how to enhance its own risk awareness and innovation ability, will be the key to an enterprise in the fierce market competition to maintain a competitive advantage.