Huawei's $3,000 device leads China's answer to Apple's foldable iPhone

Huawei Technologies Co. and Xiaomi Corp. are raising the stakes in China’s smartphone arena just days before Apple Inc.’s first foray into the foldable category.

 

Huawei on Monday unveiled the latest edition of its ultra-premium trifold device, the Mate XT 2, which has two folding mechanisms. A successor to the Mate XT released two years ago, the new device increases the complexity of engineering as well as the price: to 19,999 yuan ($2,980) or about 10% more.

 

The company’s consumer business chief Richard Yu said the rise in cost is due in part to the growing difficulty of procuring memory. In another sign of the memory supply crunch hitting specifications, the Mate XT 2 — which functions as a regular smartphone that can unfold into a 10.2-inch tablet — comes with 16GB of memory and 256GB of storage in its most basic edition, relatively paltry amounts for a premium product.

 

 

The new foldable is significant for ushering in Huawei’s LogicFolding chip design philosophy, with its Kirin 9050 Pro processor the first silicon to be developed under that program. Huawei’s semiconductor chief He Tingbo unveiled earlier this year the alternative path to developing cutting-edge semiconductors, aimed at working around US-led restrictions barring the company’s access to advanced lithography tools.

 

Ahead of the launch of the trifold phone, He published a paper dismissing concern that its technology would lead to overheating and said the new chip has significantly reduced power consumption. “The chip was cooler than its predecessor while comprising 55% more transistors per square millimeter and delivering as much as 66% power reduction on some key tasks,” He wrote in the paper.

 

The Mate XT 2 will be available to buy in China from Saturday.

 

Later in the evening, the Xiaomi 18 Fold will mark another step from a Chinese manufacturer toward greater self-sufficiency. The new handset will run on memory from homegrown champion CXMT Corp. and Xiaomi’s self-developed Xring O3 processor. It also features a passport-like design that mirrors what the first foldable iPhone from Apple is expected to look like.

 

The defensive action from two of China’s top brands underscores the threat and opportunity that Apple’s entry into the niche but premium foldable segment represents. Expected to be priced at more than $2,000, the foldable iPhone will bring new attention to these devices, which Chinese makers and global shipments leader Samsung Electronics Co. have been selling for years. In China, foldables have been a resilient bright spot in an otherwise declining market.

 

“Apple has the world’s biggest premium device installed base. Its foldable will sell well and rapidly grab market share,” Counterpoint analyst Ivan Lam said. He expects the new handset to spur wider adoption among consumers, with spillover effects that lift demand for rivals’ devices as well.

 

Xiaomi’s profit has declined for three consecutive quarters as the company worked to reduce shipments of unprofitable low-end devices. Huawei, though still posting shipment growth, also saw its profit decline in the first half in part because the company was forced to hoard more components to fend off rising memory costs. Huawei joined Xiaomi and Honor Device Co. in a fresh round of price hikes earlier this month, local media Jiemian reported.

 

Smartphones are headed for their worst contraction on record this year, with shipments likely to decline 14%, Counterpoint data shows. Chinese smartphone makers are among those worst hit due to their outsize exposure to budget devices that are least able to digest the cost of surging component prices. To escape that crunch and raise selling prices, most brands are now heavily promoting their premium tiers, such as foldables.

 

Getting out a couple of days before Apple’s splashy new product event on Wednesday gives brands the chance to own the spotlight at least momentarily. Apple could grab a quarter of the global foldable market this year and claim the No.1 spot with a 41% market share next year, according to projections by Smart Analytics Global.