Huawei predicts more smartphone price hikes due to memory crunch

Huawei Technologies Co anticipates that memory costs will lead to increased smartphone prices, as the company aims to leverage its expertise in premium devices to maintain its competitive edge. CEO Richard Yu revealed that the average cost of smartphones has risen by US$200, which has negatively impacted the company's profitability.

Despite the challenges, Yu believes that the memory crunch will force consumers to shift towards mid- and high-end smartphones, where Huawei excels. He predicted that demand for low-end products will diminish by the end of the decade, with approximately 230 million smartphones priced below US$200 disappearing.

Yu stated that Huawei plans to maintain moderate price hikes, attributing them to the rising costs of memory components. He asserted that the company will leverage its position in the premium smartphone market to protect its market share. The memory cost increases align with a broader industry trend, as Apple, Xiaomi, and Huawei have all raised device prices in recent months.

Despite the price increase, Huawei's smartphone shipments are expected to grow by 8% this year, in contrast to declines reported by domestic competitors like Xiaomi and Oppo. This growth is partly driven by Huawei's popular foldable phones, including the successful launch of the Pura X Max, which saw a 76% sales increase following Apple's introduction of its iPhone Duo.

In addition to addressing memory costs, Huawei is actively expanding its presence in overseas markets, particularly in the Middle East and Europe, as it seeks to recover from the impact of US sanctions on its global business. The company has developed its proprietary operating system, HarmonyOS, and is poised to roll out HarmonyOS on devices sold outside of China in the near future.

By leveraging its AI chips and striving to offer these to select foreign markets, Huawei aims to strengthen its position in the global technology landscape, even as it confronts the challenges posed by rising memory costs and geopolitical tensions.