Huawei's mobile phone turnover: three new products in half a year, dealers said that they have basically recovered, and the supply chain is now under delivery pressure

Time Weekly

2024-08-09 14:08Published on the official account of Guangdong Times Weekly

Source of this article: Times Weekly Author: Yang Lingling Guo Meiting

Huawei is aggressively attacking the mobile phone market.

Recently, after releasing the high-end small folding phone Pocket 2 at the beginning of the year, Huawei has once again stepped up its weight and launched the first small folding phone of its mid-range mobile phone brand nova series - nova Flip.

Interviewed industry observers told the Times reporter that since last year, Huawei has continuously updated and improved its product matrix, in order to regain lost market share and regain the throne of the mobile phone market, nova Flip is hoping to fill the gap in the mid-range folding market.

Huawei's mobile phone turnover: three new products in half a year, dealers said that they have basically recovered, and the supply chain is now under delivery pressure

Source: Photo by a reporter from Time Weekly

According to Huawei's annual report, the mobile phone business will recover significantly in 2023, and the sales revenue of terminal BG will increase by 17.3% year-on-year to 251.5 billion yuan, achieving positive growth for the first time since 2020. At the same time, according to IDC data, in the first half of this year, Huawei's mobile phone shipments became the first in China's smartphone market with a market share of 17.5%, and continued to narrow the gap with Apple in the market above 4,000 yuan.

However, after the rapid rise in mobile phone sales, on July 18, the official Weibo of "Huawei Terminal" announced that Pura70 ushered in an official price reduction after 3 months of sales, with a reduction of 500-1000 yuan. According to media reports, the price reduction is due to the fact that the Pura70 series has not sold well as expected. But so far, Huawei has not responded to this.

In the second half of the year, Huawei will also usher in a head-to-head confrontation with Apple on flagship products, for which the turnaround of the mobile phone market is far from the end.

The folding screen is radical

nova Flip is Huawei's second small folding screen phone released this year. In February, Huawei launched the Pocket 2, a new small foldable product, and at the end of last year, Huawei also released the Mate X5, a large foldable product.

Different from the two high-end series launched before, the recently released nova Flip is mainly aimed at young people, with a price in the range of 5,000 yuan to 6,000 yuan, and it is also Huawei's cheapest folding model to date.

Source: Photo by a reporter from Time Weekly

"nova flip and Pocket 2 belong to two product lines, which can form a high and low match to cover more consumer groups." Guo Tianxiang, a senior analyst at IDC China, told the Times Weekly reporter.

Previously, with hot-selling models such as Mate X5 and Pocket 2, Huawei has regained its throne in the field of folding screens. According to Counterpoint data, the global foldable smartphone market grew by 49% year-on-year in the first quarter of this year, the highest growth rate in six quarters. Among them, Huawei surpassed Samsung for the first time with a market share of 35% to become the global leader, a year-on-year increase of 257%.

According to IDC data, China's folding screen market maintained a strong growth momentum in the second quarter, with a total of 2.57 million units shipped, a year-on-year increase of 104.6%. Huawei also topped the list with a market share of 41.7%.

However, compared with the large fold, in recent years, the small fold has been heard from time to time. At the beginning of the year, Guo Mingchi, an analyst at Tianfeng International Securities, mentioned in the report that some mobile phone brands were considering giving up the small folding product line.

According to China's folding screen mobile phone market data released by Counterpoint, in the first quarter of this year, the shipments of foldable large folding models increased by 91% year-on-year, while the shipments of vertical small folding models decreased by 1% year-on-year.

Guo Tianxiang believes that the biggest advantage of the small fold is that it is easy to carry and attractive in appearance. However, there are also many disadvantages, such as high cost, easy to break, and the configuration at the same price is significantly lower than that of straight board machines. In contrast, the advantages of large folding large screens are more obvious, and with the improvement of thinness and yield rate, the use experience of large folding screens has also ushered in significant improvements.

Is the small fold still a "potential stock" worth investing in? According to Canalys research manager Liu Yixuan's observation, the shipment volume of small folding in Chinese mainland increased by 24% year-on-year in the first quarter of this year, and the growth rate of shipments in the second quarter also reached 8%, although the category growth rate is slowing down, and the small folding screen has not yet declined or bottlenecked.

In fact, there have been many entrants of small folding products recently. Shortly before Huawei released the nova Flip, Honor launched its first small folding phone, the Magic V Flip, in June, and Xiaomi's first small folding phone, the MIX Flip, was launched in July. At present, small folding mobile phones have collected all mainstream mobile phone manufacturers except Apple.

Liu Yixuan mentioned that with the release of new small folding products by mobile phone manufacturers, the sales of small folding in the domestic market this year are expected to sprint to 4 million units.

"Judging by the current market, folding screen will be a relatively popular category in the next 3 years. Given that Apple has yet to launch a folding screen product, Chinese/local brands are using this new product as their differentiation competition track to consolidate and expand their share in the domestic high-end market. She further added.

In addition, on the folding screen, Huawei may also open a new product. In mid-July, Yu Chengdong revealed in the "Walking with Hui" live broadcast room that Huawei will release a folding screen mobile phone, which is "a product that others can imagine, but can't make". Huawei has been thinking about this folding screen mobile phone for 5 years, and after a series of technical breakthroughs, it is about to be mass-produced. For this new folding screen phone, it is widely speculated that it is a tri-fold phone.

The industrial chain is busy

The hot sale of folding screens is just a microcosm of Huawei's return to the market. According to IDC data, Huawei's mobile phone shipments topped the list of Chinese smartphones with a market share of 17.5% in the first half of the year.

Behind this, the entire industrial chain is running at high speed and closely cooperating.

According to previous media reports, Huawei has a sophisticated dealer system, major customers and operators are directly supplied by Huawei, and the others are distributed by two major distributors, China Post Radio and Television and Putian Taili, the former is mainly responsible for Huawei Mate series and P series, IOT products, while the latter is responsible for Changxiang series, Maimang series, nova series.

In the past few years, due to external restrictions, the distribution of Huawei's mobile phone business at the provincial and county levels has been greatly reduced. "At that time, the inventory pressure was relatively large, but now it has basically recovered." Shanghai dealer Wu Yi (pseudonym) told a reporter from Time Weekly.

"It's normal for business to have ups and downs, and when you lose money, you will be with Huawei, and you will be a part when you make money." Li Yang, a distributor with several stores in Zhengzhou, said that he has been doing business with Huawei for more than 10 years, and he did not quit at the most difficult time, and few big businessmen around him did.

The so-called Huawei big merchants generally have at least five or six stores in a city, and the cost of an experience store is 5 million yuan, which is also the main artery of Huawei's sales system.

Recently, Huawei officially announced that the price of the Pura70 series has dropped by 500-1000 yuan. According to reports, a person in the consumer electronics industry chain said that the price reduction was because the Huawei Pura70 series did not sell as expected.

Source: Picture Worm Creative

"Mate 60 does sell better than Pura70, after all, it is Huawei's return after several years, but since last year, Huawei has continued to update and supplement the product matrix, whether it is the nova series, Mate series, Pura series, or large folding, small folding, all sell well. The main problem now is that production capacity can't keep up. Liu Ming (pseudonym), a distributor in Zunyi, Guizhou, has a deep understanding that several popular products were basically sold out when they arrived at the beginning of the release, and now they are often out of stock.

Ming-Chi Kuo has predicted that shipments of the P70 series will increase significantly in 2024 compared to the P60 series released in 2023. If the demand for mobile phone inventory replenishment is strong, P70 shipments are expected to increase by 230% to 13 million to 15 million units; If demand slows down, it is also expected to grow by 150% to 10 million to 12 million units.

This is both a good and a test for supply chain enterprises.

At the beginning of the year, some media reported that Huawei issued a "order chasing order" to the folding phone supply chain, and vigorously swept the key components of the CMOS image sensor (CIS), on the grounds that Huawei has set an aggressive folding phone shipment target this year, from 2.6 million units last year, to 7 million to 10 million units, a maximum increase of nearly 3 times, so more parts are needed.

Lin Zhi, chief analyst of Wit Display, who is familiar with the mobile phone supply chain, told the Times reporter: "Huawei's sales expectations are high this year, which has brought supply pressure to some supply chain manufacturers, especially high-end chips, and the performance and production capacity must meet the demand, which requires more collaborative innovation between supply chain manufacturers and Huawei." ”

How to fight the turnaround battle?

The mobile phone business has always been Huawei's cash cow. For a long time, Huawei's two flagship series, P and Mate, have maintained a relatively stable release rhythm. Under normal circumstances, Huawei releases the P series around March and the Mate series around September every year.

However, after 2021, due to supply-side pressures, the release rhythm of the P series and Mate series was disrupted. Among them, the release time of the P50 series in 2021 was delayed by nearly 4 months compared with normal, and it was not released until July of that year, and the P-series in 2022 was interrupted by one year; The Mate series was launched in September 2022 after a one-year hiatus in 2021.

With the interruption of the two flagship trump cards, Omdia data shows that Huawei's smartphone shipments fell from 190 million units in 2020 to 35 million units in 2021, a year-on-year decrease of 81.6%, and Huawei's global smartphone shipments ranked 9th.

Huawei's dealers have also experienced a low point in their careers. During this period, Liu Ming closed two stores and contracted for the winter.

In the first half of 2023, the P60 series will return to the normal update rhythm, and it will be difficult to find a machine, and in the second half of the year, Huawei's blockbuster flagship products Mate 60 series and folding screen Mate X5 will once again set off a rush to buy.

Source: Photo by a reporter from Time Weekly

In September last year, the manager of an offline store in Guangzhou mentioned in an interview with a reporter from Times Weekly that there were about 60-70 Huawei Mate 60 series arriving in the store, but there were more than 200 users who booked in the store.

By the fourth quarter of 2023, IDC statistics show that the market share of many mobile phone brands has declined year-on-year in 2022, while Huawei has stood out, increasing by 36.2% year-on-year, and China's market share has reached 13.9%, returning to fourth place.

At the same time, according to Huawei's 2023 annual report, its annual sales revenue was 704.2 billion yuan, a year-on-year increase of 9.63%, the largest annual increase since 2019. net profit was 87 billion yuan, a year-on-year increase of 144.5%. Among them, the sales revenue of Huawei's terminal business increased by 17.3% year-on-year to 251.5 billion yuan, reversing the downward trend.

According to a report by Counterpoint Research, Huawei will ship about 35 million mobile phones in 2023, an increase of about 5 million units from 2022. If calculated at an average price of 6,000 yuan, the sales revenue of this business is about 210 billion yuan, which has become the main driving force for the growth of terminal business revenue.

However, Lin Zhi also mentioned that the sales of Huawei's Pura70 series in the second quarter were less than expected, and Apple's price reduction offensive also brought some pressure to Huawei, causing Huawei to stimulate the market by cutting prices. "Huawei's turnaround is not easy." Lin Zhi said that at present, the mobile phone industry is weak in innovation, consumer spending is more cautious, Huawei needs to come up with more amazing products, so that more consumers are willing to pay for it.

In the second half of the year, Huawei Mate 70 and Apple iPhone 17 will usher in a head-to-head confrontation in the high-end market, and both sides are facing a lot of pressure. At present, the industrial chain has entered the stage of intensive stocking, Huawei and Apple have not released too much information about new phones, and dealers are looking forward to it, hoping that the new flagship products can detonate a new wave of hot sales.

On August 9, a number of digital bloggers posted photos of Yu Chengdong, Huawei's executive director, chairman of the terminal BG, and chairman of the intelligent car solution BU, operating a new machine in the cabin on social platforms. In the photo, Yu Chengdong is holding a new machine, the screen screen is faintly similar to the WeChat interface, the leftmost side is the message list, and the right side is suspected to be a dialog box or the content of the web page being browsed. There also appears to be a stylus hidden inside the protective case on the right-hand side.

Source: Social media

This product is also speculated to be the new trifold phone. According to supply chain sources, Huawei's new three-fold screen machine has been put into production.

Huawei's turnaround continues.

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