On Thursday, Huawei unveiled its new Mate 60 series of smartphones, featuring the company's own 5G Kirin 9000s chipset manufactured by SMIC on a 7nm process node. The move marks a significant shift for Huawei, which has previously been a major customer of Qualcomm (NASDAQ:QCOM).
Analyst Ming-Chi Kuo predicts that this development could pose a serious threat to Qualcomm's dominance in the market. In 2022, Huawei purchased between 23 million and 25 million mobile phone System-on-Chips (SoCs) from Qualcomm, and this figure increased to 40-42 million in 2023. Kuo projects that Qualcomm's SoC shipments to Chinese smartphone brands could reduce by at least 50–60 million units in 2024 due to Huawei’s adoption of the new Kirin processors.
In response to this competition, Qualcomm may initiate a price war as early as Q4 2023 to maintain its market share in China, potentially impacting its profits. Kuo also highlighted two other potential risks for Qualcomm: an increase in the market share of the Exynos 2400 in Samsung (KS:005930) mobile phones and Apple (NASDAQ:AAPL)'s expected shift to its own modem chip in 2025.
The Kirin 9000S chip is not expected to match up with the most powerful Snapdragon SoC in performance or efficiency. However, it signifies Huawei's resilience despite the US trade ban restricting the company from receiving any American 5G technology.
Qualcomm's next flagship chip, the Snapdragon 8 Gen 3, is expected to cost $180 per unit. If the company loses approximately 60 million Snapdragon 8 Gen 3 shipments, as projected by Kuo, this could translate into a loss of roughly $10.8 billion.
While Huawei has not yet announced plans to release Kirin SoCs to other Chinese phone makers, should it decide to do so, it is likely that these chips would be cheaper than the Snapdragon 8 Gen 3. As such, Qualcomm also needs to consider competition from Samsung's Exynos 2400 set to debut with the Galaxy S24 lineup.
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