Japan's dismantling of the Mate60 Pro, with a local component value of 47%, hides a misleading digital truth

Text/Wang Xinxi

Nikkei news and market research company Fomalhaut Techno Solutions recently released a Huawei Mate 60 Pro mobile phone teardown report, the report shows that the localization rate of Huawei mobile phone parts is getting higher and higher, and the value of local parts in the Mate 60 Pro has reached 47%, which is 18 percentage points higher than the Mate 40 Pro at the same price three years ago.

This data has sparked controversy in the industry,In the past, people knew,Huaweimate60 ProThe localization rate has reached more than 90%,Why is the current Nikkei Shimbun reported to account for 47%?This means that up to 53% is non-domestic?

In fact, Nikkei also disassembled the iPhone 15 Pro and concluded that the value of Chinese parts of the iPhone Pro accounted for 2%, which triggered a huge wave of discussion in China.

47% or 90%? Which is closer to the truth?

How many artificial and misleading numerical truths are hidden in the "local parts value rate"?

In fact, if we compare the two teardowns of the iPhone 15 Pro with the Huawei mate60 pro, we will find that Nikkei has created a new term for "local parts value rate".

Judging from this teardown, the Nikkei Shimbun received assistance from research firm Fomalhaut Technology Solutions (Chiyoda-ku, Tokyo), which estimated the total cost of parts for the Mate 60 Pro at $422, with China accounting for 47% of the parts made in China by country, up 18% from the Mate 40 Pro in 2020.

From the perspective of the suppliers of OLED displays with the highest unit price, the 40 Pro is South Korea's LG Display, and the 60 Pro has become China's BOE Technology Group (BOE), which has a prominent impact.

The Mate 60 Pro's Chinese-made components are worth a total of $198, up about 90% from the Mate 40 Pro (the original text does have two data, 18% and 90%, I understand that one is the ratio of domestic parts to the whole machine, and the other is the value of 60 domestic parts compared to the value of 40 domestic parts)

Fomalhaut believes that the Mate 60 Pro is powered by a 7nm chip designed by HiSilicon and manufactured by SMIC. The share of Japanese components in the Mate 60 Pro fell to 1%, down from 1% in the Mate 40 Pro. Huawei changed its supplier of camera image sensors from Sony Group to Samsung. The share of Korean components for the Mate 60 Pro increased by 5 percentage points to 36%.

Korean parts, from the current point of view, one is an image sensor, and the other is SK hynix's NAND flash memory. These two items account for as much as 36% of the value?

In fact, there is a problem with Nikkei's calculation method, which is to summarize the reduced price of localized parts into the total value of domestic + imported, and the proportion value is greatly diluted due to the large cost drop.

Some people in the industry gave an example: if a product needs ABC three parts, each import costs 4.5 yuan, an enterprise realizes the localization of part A needs 1 yuan, BC import, the localization value rate is not one-third, but becomes 1/10 = 10%; and then part B localization needs 0.5 yuan, the localization value rate becomes 1.5/6 = 25% At first glance, there is nothing wrong with the calculation process, but the problem is that 3 parts with the same price, two to achieve localization, logically speaking, the localization rate is two-thirds, but due to the greatly reduced price of localization, the price gap with imported parts is very large, the total price of the three parts has changed after the sum of the three parts, and the price proportion of the imported part has increased greatly, therefore, its value rate is not 2/3 = 67%, but has become 1.5/6 = 25%.

To put it simply, because the pure import price is more expensive, but once localization is realized, the price of domestic parts and components will be greatly reduced, resulting in a very high cost of the total value of the three parts as a whole, and the imported part of the total value. Originally, 3 needed to be imported, and now two are domestically produced, and only the last part is 100% localized, but according to the price of parts, the remaining one has not been conquered accounting for 75%. Your localization rate is only 25%.

We used to say that Huawei is 90% independent, mainly talking about the number of localized parts, for example, Huawei mobile phones have 100 parts, and 90 parts are domestic, that is, the localization rate has reached 90%, and the cost has been greatly reduced. However, according to Nikkei's calculation method, the cost of the 10 parts that are not domestically produced is relatively high, and the value of the total cost is magnified to 56%.

In fact, among the parts of a mobile phone, the most valuable is the chip, therefore, according to the localization value rate, because Huawei does not need to import chips, the cost of parts and components of the chip brought by self-development is greatly reduced. Therefore, according to this calculation, the value of the chip is greatly compressed.

Therefore, we may also see the same idea from the calculation method of 2% of Chinese parts in the Apple iPhone 15 Pro in the past, because Apple is placing more than 50% of the supply chain in China, and Chinese manufacturers in the iPhone supply chain include key parts such as packaging modules, back glass, batteries, USB, as well as C ports, acoustic components, wireless charging and assembly.

For example, in the field of camera lenses, China's Gaowei Electronics is the supply chain of the iPhone 15 series front camera module. China's Sunny Optical Technology is the supply chain for the iPhone 15 series camera lens components. The Chinese suppliers of the back glass are Lens Technology and Bourne Optics, and the battery suppliers are Desay Group and Sunwoda Electronics. In addition, Apple's new prisms are supplied by suppliers such as Zhejiang Rand Optics and Zhejiang Crystal Optoelectronics in China.

From the perspective of the total volume and value of parts in China, the proportion of 2% of parts is most likely because this similar calculation method weakens the value of China's local parts and components.

What can we see when we look beyond the rules for calculating the value ratio of parts?

Therefore, as long as you jump out of this artificially set calculation rule, you can find that this calculation rule itself is problematic, because the core components of the Huawei Mate60 Pro mobile phone - the screen, the main chip, the motherboard, the camera, the body production, and the battery are all local suppliers. The rest of the things account for 53%, which is obviously unreasonable judging from the level of common sense.

In addition, we know that in order to protect the safety of the industrial chain, the parts suppliers and purchase prices of the Mate60 are confidential, and the so-called "localization value rate of 47%" is known from where to know, and if Nikkei does not know the purchase price, how can it determine the value rate of 47%?

After all, the mobile phone industry is normal for a flagship machine parts, but if it is possible, it must be guaranteed by multiple suppliers when it is mined, and accurate statistical results cannot be obtained just by disassembling a mobile phone.

Back to the calculation of the value ratio of parts. If we build a flagship mobile phone, if all the parts are imported, it may take 4,000 yuan to build, but after 90% of the parts are localized, only 2,000 yuan of the cost can be made, we obviously can't say that this localized part only accounts for 50% of the value of the parts, but through localization to enhance the cost competitiveness. This is a seemingly reasonable but in fact inflated price to replace a very small part of the value of imports, in fact, it is an artificial double standard.

In addition, we not only need to care about the value analysis of the dismantling of parts, but also need to care about the equipment that produces these parts, the equipment that assembles the patch, and the domestic substitution of these precision machine tools is also the result of upstream and downstream collaboration.

After the localization of parts, the successful realization of the cost of various imported parts and components of the great price reduction, means that from the product to the supply chain competitiveness has been improved, independent control has been strengthened, which itself is the purpose of localization, and the calculation of the value rate of parts and components is actually distorted and devalued the value of parts localization, in this regard, we may have a clear understanding of this.

Author: Wang Xinxi, Senior Reviewer of TMT This article is not reproduced without permission