Huawei and Apple, which "sold out", ignited the "new war" of mobile phone chips
Image source: @VisualChina
The past September can be said to be the most lively month in the mobile phone industry this year, with full attention and hot searches. However, this excitement only belongs to two brands, one is Huawei and the other is Apple. With the release of new machines, Huawei and Apple have frequently appeared in hot searches.
Among them, the iPhone 15 series is more popular in the early stage of sales, and the Pro Max version needs to queue for goods. Huawei's new machine performance is even more exaggerated, Mate60 series and Mate X5 online and offline machine is difficult to find, a month after the release still need to increase the price of thousands of yuan to buy.
iPhone 15 series, shot by Titanium Media App
According to reports, the performance of the Mate 60 series of mobile phones exceeded expectations, and Huawei increased the shipment target of the series of mobile phones in the second half of the year by 20%, and Huawei shipped at least 40 million new machines throughout the year. "Huawei's return will have an impact on every mobile phone brand, especially brands with similar rankings, and the pattern of the domestic high-end mobile phone market will also be reconstructed," Ivan lam, senior analyst at Counterpoint, told Titanium Media App.
It is worth noting that the impact of Huawei's Mate 60 series and iPhone 15 series is not only reflected in the terminal, but also reshaping the brand pattern, it will also have a certain impact on upstream chip manufacturers, the first of which is Qualcomm and MediaTek, making its already declining performance worse.
Mate60, iPhone 15 hot sales, Huawei returned to the "first"
September is the annual Spring Festival Gala in the technology world, and the release of the new iPhone has become the focus of global attention. However, compared with the past, the current iPhone only has a sense of ritual to announce the price, and there are more complaints. However, these do not delay the sale of new iPhones, from pre-sales to official sales, are the main promotion of major platforms. According to the data chart previously released by the blogger "mobile phone chip master", it can be seen that after the iPhone 15 series went on sale, it ranked first in the weekly list of the domestic mobile phone market.
Usually, in order to avoid the edge of the new iPhone, most mobile phone brands will not choose to release new products before and after Apple's autumn conference, but there are exceptions, such as Huawei. On August 29, Huawei Mate60 Pro was not sold first, causing a rush in the market, and then launched a series of products such as Mate60 Standard Edition, which is also difficult to find. The data shows that after the release of Huawei Mate60 Pro, the weekly sales of Huawei mobile phones increased rapidly.
In the week after the release of the iPhone 15 series, Huawei also ranked second only to Apple, ranking first in domestic mobile phone sales in the Chinese market. On the social platform, the blogger "Digital Chat Station" also revealed that Huawei's Mate60 series has gone to 200W.
Previously, Yu Chengdong, CEO of Huawei Terminal BG, said that Huawei mobile phones are on the road to return. According to the Securities Daily, people close to Huawei revealed that the performance of the Mate60 series of mobile phones exceeded expectations, and Huawei increased the shipment target of the series of mobile phones in the second half of the year by 20%, and Huawei's new machine shipments were at least 40 million units throughout the year.
Ivan lam told Titanium Media App that the hot sale of Huawei's Mate 60 series will also have a greater impact on the iPhone's share of the high-end market in China, and it is estimated that Q4 will have a fluctuation in the ranking. In addition, there are reports that Huawei aims to ship 60 million to 70 million smartphones in 2024, and has added enough orders to the supply chain to ensure that this shipment figure can be reached throughout 2024.
The performance declined, Qualcomm and MediaTek were more anxious
For well-known reasons, Huawei mobile phones have not had much presence in the past two or three years, and have also fallen from the world's second throne to the "others" team. However, after a series of adjustments, Huawei's new product release rhythm returned to normal, and shipments continued to recover. Huawei has revealed that since it was sanctioned by the United States more than 3 years ago, its product release cycle has returned to normal.
Image source: IDC
IDC data shows that in the second quarter of this year, Huawei's shipments in the domestic market ranked joint fifth with Xiaomi, with a year-on-year increase of 76.1%, the largest year-on-year increase among TOP manufacturers. Not only that, Huawei also maintains the second place in the high-end market above $600.
Nowadays, with the hot sale of Huawei's Mate 60 series, the domestic mobile phone market will usher in a new round of reshuffle. Ivan lam told Titanium Media App that Huawei's return will have an impact on every mobile phone brand, but how long it will take to return to the previous highlight depends on the supply chain capacity and the performance of specific products.
It is worth noting that after Huawei became popular, in addition to the sudden increase in pressure from terminal brands such as Xiaomi, OPPO, vivo, and honor, upstream chip manufacturers were also "nervous". On the one hand, Huawei will further reduce the purchase of Qualcomm processors. On the other hand, when the global mobile phone market has not yet returned to positive growth, Huawei's comprehensive return has compressed the market space of other mobile phone brands, coupled with the expansion of the iPhone in the mobile phone market this year, which will naturally affect the shipments and performance of chip manufacturers such as Qualcomm and MediaTek.
Image source: Qualcomm earnings report
The latest second-quarter financial report data shows that Qualcomm's revenue was $8.451 billion, down 23% year-on-year, and net profit was $1.803 billion, down 52% year-on-year. QCT, a semiconductor business based on chip products, is Qualcomm's main source of revenue, accounting for 80% of revenue. Among them, mobile phone chip-related revenue was 5.255 billion US dollars, accounting for 73.32% of the QCT department, and the revenue fell by about 25% year-on-year.
In the earnings conference, talking about Huawei, Qualcomm CFO Akash Palkhiwala said that in the expectation for the next two quarters, it is not assumed that there will be a large amount of revenue related to Huawei. Qualcomm currently has a license to supply 4G chips to Huawei, but not a license to supply 5G chips.
Image source: MediaTek earnings announcement
MediaTek's performance is also difficult to improve, with consolidated revenue of NT$98.135 billion in the second quarter, down 37% year-on-year; Consolidated gross margin for the second quarter was 47.5%, down 1.8% year-over-year; Consolidated net profit for the second quarter was NT$16.019 billion, down 55% year-on-year. About 50% of MediaTek's revenue is related to mobile phones, and Cai Lixing, vice chairman and CEO of MediaTek, said that the contraction in smartphone sales since 2023 is mainly due to the extension of the consumer replacement cycle, which reaches nearly 24 months.
An industry chain insider revealed to us that Huawei's return was expected by Qualcomm and MediaTek, but it was not expected to be so fast, and before the cold atmosphere of the whole industry has not all dissipated, the two need to accelerate adjustments at the operational level, "Huawei's offensive is very strong, unless Qualcomm and MediaTek can bring qualitative breakthroughs in experience, which will trigger a wave of replacement." ”
A few days ago, Guo Mingxi, an analyst at Tianfeng International Securities, said that in 2022 and 2023, Huawei purchased 23-25 million and 40-42 million mobile phone SoCs from Qualcomm respectively, and if Huawei uses all its own chips next year, then Qualcomm will lose this part of the order. At the same time, he also expects that Qualcomm's SoC shipments to Chinese mobile phone brands in 2024 will be at least 50 million to 60 million fewer than in 2023 because Huawei uses its own processors, and it is expected to continue to decrease year by year.
In addition, after the release of Huawei's Mate 60 series, there is also news in the market that MediaTek began to cut the number of wafer (wafer) chips in 2024. In this regard, MediaTek denied it, saying that it did not reduce the shipment figure.
Layoffs, price cuts, and more pressure to come
In addition to dealing with the negative impact of the decline in the global consumer electronics market, Qualcomm and MediaTek now have the thorny problem of Huawei's return. After the subsequent NOVA series changes the "core", the already competitive mid-range market will be further compressed. In order to alleviate the performance difficulties, Qualcomm has carried out a series of cost reduction and price reduction measures.
According to relevant reporting documents submitted by Qualcomm, in the nine months ended June 25, 2023, Qualcomm incurred $285 million in adjustment-related expenses, the vast majority of which were employee severance expenses. These actions are included in Qualcomm's cost-cutting measures in fiscal year 2023 and are expected to be substantially completed by the end of the fiscal year.
According to the latest news, Qualcomm said in a filing with the California Department of Employment Development that it will lay off about 1,064 San Diego employees and 194 Santa Clara employees, and the layoffs will take effect on December 13. Last month, Qualcomm also attracted the attention of the industry because of the layoff of the WiFi department in China. Some reports pointed out that Qualcomm's layoffs in China are about 20%, and the action in October should be more concentrated. Qualcomm CFO Akash Palkhiwala also said that the company's trend of cutting costs will not change immediately until it sees signs of continued improvement in fundamentals, and the cost reduction measures are expected to continue into the company's next fiscal year.
While reducing costs through layoffs, Qualcomm also attracts terminal manufacturers to increase procurement efforts by cutting prices. Guo Mingxi said that Qualcomm may launch a "price war" in the fourth quarter of this year to maintain market share. However, price wars will only make the data look better on the surface, but it will inevitably have a negative impact on profits in the long run.
"The market plate is so big, Qualcomm fights a price war, and MediaTek's share will be robbed of a part," the above-mentioned industry chain source pointed out. "At present, the probability can only hope that the consumer electronics market will return to growth as soon as possible, otherwise under the strong performance of Huawei and iPhone, the pressure on Qualcomm and MediaTek will only increase."
In the first half of this year, the blogger "mobile phone chip expert" said on social platforms that MediaTek cut another 4nm, 6nm, and 12nm order on TSMC. IDC China senior analyst Guo Tianxiang told Titanium Media App that MediaTek cut orders, first of all, it still believes that the recovery of the downturn of smartphones in the short term is not optimistic, and secondly, brands still have a lot of low-end 4G chip inventory, and low-end 4G chips are mainly MediaTek, and it will take a while to consume inventory.
It should be pointed out that greater pressure from Qualcomm and MediaTek is still ahead. At present, in the mobile phone camp, Apple has been using its own chips, Huawei is likely to abandon Qualcomm after the increase in production capacity, Samsung is a mix of Qualcomm and self-developed chips, but the bad news is that the newly released Samsung Exynos 2400 in Samsung mobile phones will be higher than expected.
As for domestic mobile phones other than Huawei, they are still purchasing chips from Qualcomm and MediaTek. However, more and more domestic brands have begun to increase investment in self-research, among which in Xiaomi's official recruitment, a large number of positions related to SoC design have appeared. At the previous earnings meeting, Xiaomi Group President Lu Weibing also said that Xiaomi's determination to invest in self-developed chips will not waver, and it is necessary to fully realize the long-term and complex nature of chip investment, respect the development law of the chip industry, prepare for a protracted war, and prepare for a long-term struggle for 10 or 20 years.
At present, consumer electronics has not yet come out of the downward cycle, the competition of terminals is a competition on the bright side, and the competition for upstream chips is an invisible dark war. After Huawei's return, it will not only reshape the pattern of mobile phone terminals, but also usher in a new distribution of mobile phone chip industries. As for traditional giants such as Qualcomm and MediaTek, the difficulty of reversing the decline in performance has been raised another level. (This article was first published on Titanium Media App, author/Du Zhiqiang, editor/Zhong Yi)