SHENZHEN: Huawei Technologies Co plans to join its rivals in jacking up smartphone prices to counter rising memory costs, betting on a chips-to-software edge to protect its lead while it explores markets abroad.
The Chinese technology champion has seen an average increase of US$200 in its smartphone costs, according to Huawei’s consumer business chief Richard Yu, though he did not specify a time frame for comparison.
“We’ll have to raise prices going forward, though it will be moderate,” Yu told reporters in Shenzhen, home to Huawei. “It’s hurting our profitability very badly.”
At the same time, Yu said the memory crunch will give Huawei an edge as a premium smartphone maker against budget brands. Some 230 million smartphones priced below US$200 will be wiped out by the end of this decade, market tracker Counterpoint Research recently estimated.
“Demand for low-end products will be further compressed, forcing everyone to move to the mid and high-end segment, which is what Huawei excels at,” Yu said.
“We are confident we can survive this cycle to bring more product innovation.”
Yesterday, Huawei unveiled a new generation of its premium handsets, with the special edition of its Mate 90 Pro Max starting at 10,999 yuan (US$1,640).
Global smartphone and electronics brands from Apple Inc to Xiaomi Corp have seen their margins come under pressure this year, as an unprecedented artificial intelligence buildout pushes up costs for various components.
Apple, Xiaomi, and Huawei all raised pricing of their devices in September.
Amid the memory crunch, consumer demand in China has remained soft this year and weekly smartphone sales in the country have declined by double digits year-over-year since July, Counterpoint said this week. — Bloomberg
