Huawei's Three-Way Foldable Phone: A Game-Changer in China's Smartphone Market?
By David Kirton
SHENZHEN, China (Multibagger) - In a strategic move to solidify its dominance over Apple (NASDAQ: AAPL) in the world's largest smartphone market, China's Huawei Technologies unveiled its revolutionary three-way foldable phone on Tuesday. This innovative Z-shaped Mate XT aims to capture the growing enthusiasm for foldable smartphones in China, mere hours after Apple's latest iPhone release.
Huawei's new Mate XT, showcased on its flagship e-commerce platforms a day before the official launch, has already amassed over 3.3 million pre-orders. This staggering figure highlights the immense interest in foldable technology within China, especially when compared to the global foldable phone market, which saw around 4 million units sold in the second quarter, according to IDC.
This latest release underscores Huawei's resilience in navigating U.S. sanctions and reinforces its competitive stance against Apple in China. Huawei had previously outperformed Samsung Electronics (KS: 005930) to become the leading global vendor of foldable phones, thanks to the success of its two-way foldable models.
However, analysts caution that the Mate XT's steep price tag and limited supply might render it more of a technological marvel than a significant revenue driver. "The upcoming Huawei products are not expected to significantly impact Samsung and Apple's businesses in terms of product quantity," noted Jene Park, an analyst at Counterpoint. "There is a limit to the quantity of products supplied. However, there may be some impact on sales in certain Chinese markets."
The foldable smartphone market experienced a 57% year-on-year growth in the second quarter, with 3.9 million units shipped, driven largely by Chinese manufacturers expanding into overseas markets. Despite this growth, foldables still represent only 1.3% of the broader smartphone market, which saw 292.2 million units shipped in the same period, according to IDC.
"The average consumer still has limited knowledge about foldable smartphones and their benefits," said Will Wong, a senior researcher with IDC. High prices are another significant barrier. Last year's Mate X5, for instance, still retails for over 10,000 yuan ($1,406) in China, nearly double the price of a new iPhone 15.
Addressing issues like screen wrinkles and durability due to multiple hinges will be crucial for the widespread adoption of foldable phones, Park added.
Huawei held a 27.5% market share in the global foldable smartphone market in the second quarter, outpacing South Korea's Samsung, which held 16.4%, according to IDC. In China, Huawei's market share jumps to 42%, ahead of other domestic brands like Vivo and Honor, the latter of which was spun off from Huawei in 2020 due to U.S. sanctions.
In the broader Chinese smartphone market, Apple's ranking has plummeted from third to sixth place in the second quarter, while Huawei has ascended to become the third-largest vendor, bolstered by robust sales of its latest smartphone models.
($1 = 7.1105 renminbi)
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Analysis for Easy Understanding
What Happened?
- Huawei launched a new three-way foldable phone, the Mate XT, in China.
- This launch came just after Apple released its latest iPhone model.
Why is This Important?
- Huawei is trying to gain an edge over Apple in the Chinese market, which is the largest smartphone market in the world.
- The new foldable phone already has 3.3 million pre-orders in China, showing strong interest.
Market Impact
- The overall global market for foldable phones is still small but growing fast.
- Huawei has outperformed Samsung to become the leading seller of foldable phones worldwide.
Challenges
- The new Mate XT is expensive, and its limited supply may restrict its impact on overall sales.
- Consumers still need to be educated about the benefits of foldable phones.
- Durability issues, like screen wrinkles, need to be addressed for wider adoption.
Financial Implications
- For investors, Huawei's innovation and strong pre-order numbers indicate potential growth.
- Apple has seen a drop in its market share in China, which could affect its global performance.
- Understanding these market dynamics can help you make better investment decisions.
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By breaking down these key points, even someone with little financial knowledge can grasp the significance of Huawei's latest move and its potential market impact.