Huawei's strong momentum continues in China and negatively impacts Apple

Huawei's amazing turnaround began exactly one year ago tomorrow. Back then, Huawei unveiled a new flagship line powered by its own chipset for the first time since 2020. The Mate 60 series featured the Kirin 9000s that supported 5G. Before the Mate 60 line, Huawei used Snapdragon SoCs optimized to block 5G connectivity on the P50 series, Mate 50 series, and P60 line. Qualcomm received approval from the U.S. Department of Commerce to supply these chips to Huawei.
The Kirin 9000 was manufactured by China's largest foundry, SMIC, using their 7nm process node. Since advanced lithography equipment cannot be shipped to China, 7nm is the best process node SMIC has been able to apply using deep ultraviolet (DUV) lithography. We continue to hear of amazing discoveries that will allow SMIC to manufacture 5nm and even 3nm chipsets, but so far none of these rumors have come to fruition.
Still, Huawei was able to use the momentum of the Mate 60 series to generate demand for its flagship Pura 70 series, knocking the iPhone off the list of the top five best-selling smartphones in China, the world's largest smartphone market. For the quarter ended June, Huawei reported revenue of 239 billion yuan ($33.6 billion), up 33.7% year-on-year. This was Huawei's sixth consecutive quarter of revenue growth.

The company was close to achieving its goal of becoming the world's largest smartphone maker when the US began imposing sanctions on the company in 2020, forcing it to develop its own HarmonyOS operating system. The US also forced Huawei to stop developing its own cutting-edge 5G Kirin processors.

Huawei's implied net profit for the second quarter was 35.5 billion yuan ($4.72 billion). While this represents an annual decline of 18.6%, the company reported one-time gains from divestments last year. In the second quarter, Huawei said its smartphone shipments increased by 50% as it and other Chinese companies such as Vivo and Oppo pushed the iPhone out of the top five smartphones sold in the country. Apple fell to sixth place. The top five in the second quarter were, in order:

  1. Vivo – 19% market share
  2. Oppo-16%
  3. Honor-15%
  4. Huawei – 15%
  5. Xiaomi – 14%

At the end of this year, Huawei will launch its flagship Mate 70 series. The Mate phones are known for their cutting-edge features. It will be interesting to see what Huawei comes up with and what specifications the application processor that will power the lineup will have.

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