Source to media China Times, after an extensive promotional campaign, Huawei’s Mate 60 smartphone, which has regained attention in mainland China’s media and online platforms, has finally secured the second position in the Chinese domestic smartphone market for the 36th week (4^th~10^th, Sep.), with a 17% market share. It is just a 0.2% difference from the top-ranked Honor smartphone. Supply chain sources estimate that by the 37th week (11^th~17^th, Sep.), Huawei could potentially claim the top spot in market share.

According to reports from “Mydrivers,” Huawei’s smartphone sales have been improving lately, thanks to media and online promotion of the Mate 60. Data from authoritative market research organizations in the supply chain indicates that in week 36 (4^th~10^th, Sep.), Huawei achieved a 17% market share in smartphone sales, securing the second position in the Chinese smartphone market.

The report notes that although Huawei is ranked second, this achievement in market share comes amidst “well-known significant pressures.” Moreover, it trails only 0.2% behind the top-ranked Honor (17.2%). Supply chain insiders anticipate that by week 37 (11^th~17^th, Sep.), Huawei is poised to claim the top spot in market share, a remarkable feat considering the significant pressures facing the company.

The report highlights that Huawei’s current sales situation is characterized by a shortage of the entire Mate 60 lineup. Supply chain sources reveal that orders for the Mate 60 Pro have increased to 15-17 million units. Information from distributors indicates that Huawei began comprehensive sales of the Mate 60 Pro in physical stores starting from September 10th.

Analysts had previously expressed optimism about Huawei’s return to the high-end smartphone market in mainland China. The previous Mate50 series achieved sales of approximately 5 million units, and it is expected that the Mate 60 series could surpass 6 million units.

According to TrendForce research on the ranking of 2Q23 smartphone production, in China, Transsion (including TECNO, Infinix, and itel) eclipsed Vivo to secure the fifth spot for the first time ever. TrendFroce reveals that Transsion’s high production output benefited from a trifecta of inventory replenishment, new product launches, and its entry into mid-to-high-end markets. Demonstrating robust production performance since March, the company’s growth trajectory is poised to extend its momentum into Q3. Meanwhile, Vivo (including Vivo and iQoo) is treading cautiously amid a sluggish global economy, which is evident in its conservative production plan: Vivo churned out 23 million units in Q2—a modest quarterly increase of 15%—and as a result, slipped to sixth place in global rankings.

Xiaomi (including Xiaomi, Redmi, and POCO) is reveling in a bountiful Q2, posting production numbers of around 35 million units—a staggering seasonal uptick of 32.1%. This boom can be attributed to a strategic depletion of channel inventory coupled with the allure of new product launches. However, Xiaomi’s channel inventory still runs high, setting the stage for a Q3 that is likely to mirror its Q2 performance. On the other side of the spectrum, Oppo (including Oppo, Real, and OnePlus) also had a fruitful Q2. The brand primarily rode the wave of rebounding demand in Southeast Asia and other regions, amassing approximately 33.6 million units and marking a seasonal leap of 25.4%. With seasonal demands on the horizon, Oppo’s Q3 production is poised for an estimated growth of 10~15%, primarily targeting markets in China, South Asia, Southeast Asia, and Latin America, hot on Xiaomi’s heels.

Currently, the top-ranking Honor smartphone is also a Chinese smartphone manufacturer. Originally launched as a sub-brand under Huawei’s product line series in September 2011, it began independent operations on December 16, 2013. Towards the end of 2020, Honor separated from Huawei, and there were multiple rumors about Honor’s independent listing preparations, which the company denied. (Image credit: Huawei)

(Source: https://www.chinatimes.com/realtimenews/20230921005374-260409?chdtv)

According to a report by Taiwan’s Central News Agency, the Apple iPhone 15 series has made its debut, and analysts have examined the supply chain, highlighting the increasing penetration of Chinese manufacturers in key components such as packaging modules, back glass, batteries, USB-C ports, acoustic components, wireless charging, and assembly. The role of Chinese manufacturers in critical optical components, including prisms, is particularly noteworthy.

Apple recently unveiled the iPhone 15 series, drawing market attention to the status of component suppliers, especially the progress made by Chinese manufacturers in optical key components. The top-tier iPhone 15 Pro Max features a tetraprism design in its telephoto camera. Ming-Chi Kuo, an analyst at TF International Securities, pointed out that this prism is a key component used for the first time in Apple’s iPhones. He speculates that the prism may be primarily supplied by China’s Lante Optics, with Crystal-Optech possibly being the second supplier.

In the realm of camera lenses, both reports from Japanese securities and Ming-Chi Kuo suggest that China’s Cowell may enter the supply chain for the front camera modules of the iPhone 15 series. Analysts also speculate that China’s Sunny Optical Technology may join the supply chain for camera lens components in the iPhone 15 series.

Regarding semiconductor packaging, while the system-in-package (SiP) modules for the iPhone 15 series are still primarily supplied by USI under the ASE Group, analysts anticipate that China’s JCET Group and Luxshare Precision will also enter the supply chain for SiP modules.

In the realm of back glass, the market generally expects that Lens Tech and Biel Crystal will remain the only two suppliers. In terms of acoustic components, GoerTek Acoustics is expected to provide a significant portion of the supply.

Analyzing the battery sector, reports from Japanese securities reports indicate that China’s Desay and Sunwoda are entering the supply chain for battery packaging in the iPhone 15 series.

Additionally, Luxshare Precision’s position in the supply chain for the iPhone 15 series cannot be underestimated. Analysts suggest that Luxshare has entered the assembly subcontracting supply chain for the iPhone 15, iPhone 15 Plus, and the top-tier iPhone 15 Pro Max. Some analysts estimate that Luxshare’s overall assembly share in the iPhone 15 series has increased to 28% to 30%, trailing only behind Hon Hai Precision Industry Group’s share of 58% to 60%.

Furthermore, analysts also point out that Luxshare has ventured into components such as wireless charging modules, USB-C ports and cables, as well as haptic technology elements in the iPhone 15 series.

According to the news from Taiwan media, CNA, Huawei has broken through the U.S. blockade and launched a 5G smartphone equipped with domestically produced Chinese chips, sparking discussions. Huawei stated that although Chinese-made chips lag behind foreign counterparts, if they are not used, staying behind will always be a setback. If widely adopted, it could drive technological progress and catch up gradually.

According to reports from Chinese media Yicai, representatives from Huawei made these remarks during a speech at the “2023 World Computing Conference” on the 15th.

Huawei mentioned that the computing industry includes PCs, servers, operating systems, databases, as well as processors, memory modules, SSDs, HDDs, network cards, RAID cards, SSD controllers, network chipsets, and RAID card chipsets that constitute PCs and servers, which are the most critical problems to solve.

“We couldn’t even make LOM and RAID cards before, and we couldn’t even create a PMIC for a server. So, we need to return to the basics of the computing industry.”

Huawei believes that China needs to develop its own processors, operating systems, and databases. If all of these are sourced from external suppliers, there is a risk of information breaches through backdoors and vulnerabilities in PCs and servers. It could also be exploited as a means of attacking other servers and PCs.

“If our opponent is at an expert level, even though we have domestically produced products, we are still at a basic level, making it relatively easy to attack and steal information”. Huawei emphasizes that domestic production does not necessarily equate to security; only by enhancing capabilities can genuine security be achieved.

“There are currently more than 600 Chinese enterprises listed on the U.S. government’s entity list,” said Huawei’s representative, covering chips, hardware, software, algorithms, and applications. Additionally, export controls have impacted everything from design tools and materials to manufacturing equipment and chip products.

“In this situation, a practical problem we face in the long term is that China’s semiconductor manufacturing process will remain behind for quite a while. Huawei believes that this situation will persist for a considerable period because advanced processes are needed to produce more advanced chips. On the other hand, due to U.S. sanctions, obtaining advanced chips or computing systems presents challenges, if not impossibilities. Based on our years of experience and future judgment, this is a long-term situation. Don’t harbor any illusions about the future.”

“Although the chips, servers, and PCs we produce lag behind those produced abroad, if we don’t use them, the gap will always be there, and falling behind will always be the case. But if we use them on a large scale, it could drive progress in our entire technology and product development, gradually catching up”. According to Huawei, only through widespread use of domestic chips can push the entire computing industry to progress and develop.

Huawei recently quietly launched a high-end 5G smartphone equipped with the 7nm chip “Kirin 9000S,” manufactured by SMIC. While Chinese public opinion refers to it as a “breakthrough of the U.S. blockade” and a “strong return to 5G,” experts point out that its performance still lags behind the latest smartphone chips by two generations and question its manufacturing yield rate and output.

(Source: https://www.cna.com.tw/news/acn/202309160229.aspx)

Last month, the primary iPhone casing supplier, American company Jabil, announced that it had reached a preliminary agreement with China’s prominent EMS (Electronic Manufacturing Services) firm, BYD, to sell its Mobile Business Unit for $2.2 billion. The completion of the subsequent transaction will depend on due diligence findings and final agreement terms.

TrendForce analysis reveals that as Jabil’s main focus in its Mobile Business Unit is iPhone casing manufacturing, the successful conclusion of this deal would leave iPhone casing supply primarily in the hands of Chinese and Taiwanese manufacturers, potentially bolstering China’s position in the supply chain.

Furthermore, BYD’s acquisition of Jabil’s China Metal Business not only marks its formal entry into the iPhone supply chain, expanding its presence, but also signals its aspirations to become a supplier in the iPhone assembly business.

Jabil’s main production facilities for its Mobile Business Unit are located in Wuxi and Chengdu, China. Wuxi primarily handles iPhone aluminum frame manufacturing, while Chengdu focuses on stainless steel components. This year, the iPhone 15 Pro features a titanium alloy frame for the first time, and Jabil is a key supplier for this component.

In terms of operational performance, Jabil’s Wuxi facility, due to its smaller scale compared to Foxconn and Lens Tech, and lower product prices, has underperformed expectations. Conversely, Chengdu, responsible for high-end metal components, has superior technical capabilities and better performance.

Considering Jabil Group’s global footprint and the configuration of its key customer supply chains, the company had been seeking a buyer for some time. Initially, Luxshare was a contender in the acquisition, but a consensus on the purchase price was not reached, leading BYD to secure the deal at a higher price.

TrendForce believes that BYD’s acquisition presents an opportunity to replicate Lens Tech’s experience in acquiring the Catcher’s Taizhou factory in 2020, becoming a direct supplier of iPhone casings. Given Jabil’s involvement in both high-end and low-end iPhone casing businesses, BYD might even be in a position to directly compete with Foxconn for high-end orders. This move would make it difficult for Lens Tech, which still lacks a high-end product line and advanced manufacturing processes, to join the ranks of high-end product suppliers.

In the long term, TrendForce believes that BYD, which is already an iPad EMS supplier, aims to leverage its position in critical components to venture into iPhone EMS business in the future, expanding its EMS business footprint.

(Photo credit: BYD)

Report to the media, China Times the analyst, Ming-Chi Kuo, from TF International pointed out that demand for the Huawei Mate 60 Pro exceeded expectations, leading to a 20% increase in shipments in the second half of 2023, reaching 6 million units. In 2024, Huawei is set to launch new high-end phones in the P series and Mate series, with procurement reaching a scale of 30 to 40 million units.

Kuo emphasized that Taiwanese manufacturer COMPEQ will experience revenue growth thanks to Huawei’s high-end phones and Amazon’s AI servers.

Due to the Huawei Mate 60 Pro’s adoption of a 12-layer anylayer HDI motherboard, COMPEQ’s production yield is better, accounting for approximately 50% to 60% of shipments, significantly higher than the second supplier, Founder Technology.

It is expected that COMPEQ will be the largest motherboard supplier for Huawei’s new high-end P and Mate series in 2024, with contributions from Huawei’s high-end phones projected to grow by at least 150% to 200% in 2024.

COMPEQ will also enter the AI server market in 2024, becoming a long-term growth driver for the company. If successful, Amazon/AWS will be one of COMPEQ’s key customers for AI servers in 2024. (Image credit: Huawei)

(Source: https://www.ctee.com.tw/news/20230914700952-430502)