Ming-Chi Kuo, known for his insights into the tech industry, predicts that Qualcomm will not only lose all of Huawei’s chip orders from 2024 onward but will also face the risk of declining shipments to other Chinese smartphone brands due to increased competition from Huawei.
In a strategic move that is set to disrupt the smartphone chip market, Chinese tech giant Huawei has plans to exclusively use its self-developed Kirin processors in its smartphones, beginning in 2024.
In recent years, Huawei had been a substantial customer for Qualcomm, purchasing 23-25 million and 40-42 million mobile phone SoCs (System on Chips) in 2022 and 2023, respectively. However, Kuo’s analysis suggests that Huawei’s upcoming smartphone models will entirely adopt its newly developed Kirin processors, spelling an end to its reliance on Qualcomm.
Qualcomm is expected to feel the impact of this shift in Huawei’s chip strategy significantly. SoC shipments to other Chinese smartphone brands are projected to decrease by at least 50-60 million units in 2024 compared to 2023, owing to Huawei’s preference for Kirin processors. This decline is expected to persist in subsequent years.
Kuo points out another potential challenge for Qualcomm – the risk of initiating a price war in an effort to maintain market share in the Chinese market, a move that may negatively affect profits.
Additionally, Qualcomm faces competition from Samsung’s Exynos 2400, which has garnered a higher-than-expected market share in Samsung mobile phones. Furthermore, Apple’s plans to use its own modem chips starting in 2025 pose another potential threat to Qualcomm’s market position.
Huawei, in collaboration with China’s Semiconductor Manufacturing International (SMIC), has already made significant strides in the chip manufacturing sector. They have developed an advanced 7-nanometer processor to power their latest smartphones. It has been reported that the company is utilizing a homemade advanced 7nm chipset, known as Kirin 9000s, in its recently released Mate 60 Pro smartphone.
While Huawei’s move toward self-developed processors is seen as a strategic step to reduce dependence on external suppliers, it presents a considerable challenge to Qualcomm’s market share and profitability in the competitive smartphone chip industry. The impact of this shift will likely be closely monitored by industry experts in the coming years.
