Huawei plans moderate smartphone price increases to counter an average $200 per-unit cost hike driven by rising memory component costs, and unveils new handsets

Your smartphone's price is likely to increase due to rising memory costs, even if the device itself does not significantly change.

Huawei has launched its Mate 90 smartphone series, featuring its proprietary HarmonyOS 7 and a new Kirin 9050 Pro chip utilizing a novel 3D wiring technique called LogicFolding. This innovation aims to enhance processor performance despite ongoing US restrictions on advanced semiconductor technology. The company faces significant cost pressures, with rising memory component prices increasing the per-unit cost by an average of $200. Consequently, Huawei plans moderate price increases for its new handsets, with the Mate 90 Pro Max starting at 9,999 yuan, a 2,000 yuan increase over its predecessor. Huawei's consumer business chief, Richard Yu, acknowledged that China's advanced chipmaking still relies on older lithography technology. Despite market challenges, Huawei's domestic smartphone shipments grew 13% from January to August, contrasting with a 7% overall market decline. The company also highlighted its strong position in the foldable phone market, citing a 76% sales increase for its Pura X Max following Apple's entry with the iPhone Duo.

Huawei's reliance on novel chip architecture like LogicFolding signifies a strategic pivot to overcome semiconductor supply limitations imposed by US sanctions. This approach, while promising performance gains, introduces new manufacturing complexities and potentially higher production costs due to increased wafer usage. The company's ability to secure sufficient advanced chip capacity, even with these innovations, remains a critical factor for its future smartphone competitiveness and market share.

The increasing cost of components, particularly memory, is forcing price adjustments across the industry, pushing consumers towards premium devices. Huawei's strategy of moderate price hikes and a focus on its domestic market, especially in the growing foldable segment where it holds a dominant position, demonstrates a resilience amidst global supply chain challenges. Competitors, including Apple, are now entering markets where Huawei has already established significant traction.