Huawei Also to Raise Smartphone Prices: "Memory Costs Squeezing Profitability"

Huawei plans to further increase its smartphone prices in order to offset the cost burden caused by rising memory prices.

Reuters Yonhap News

According to Bloomberg News on October 1 (local time), Yu Chengdong (Richard Yu), CEO of Huawei's Consumer Business Group, stated that the average cost per smartphone has risen by approximately $200 due to factors such as higher memory prices. However, he did not specify the point in time with which this figure was being compared.

Speaking to reporters in Shenzhen, where Huawei's headquarters is located, CEO Yu said, "We have no other choice but to raise prices going forward, but the magnitude of the increase will not be significant," and added, "The burden of memory costs is severely undermining our profitability."

However, Yu pointed out that the memory supply shortage could work to the advantage of premium smartphone makers like Huawei when compared to budget brands. Market research firm Counterpoint Research recently estimated that by 2030, approximately 230 million smartphones priced below $200 will disappear from the market.

He said, "Demand for low-priced products is shrinking further, and companies will have no choice but to shift to the mid- and high-end markets. The mid- and high-end market segments are where Huawei has a competitive edge," he said. He added, "We are confident in withstanding this industry cycle and introducing even more product innovations."

This year, while Chinese competitors such as Xiaomi and OPPO have raised smartphone prices several times, Huawei has largely kept its prices steady. Yu Chengdong explained that maintaining prices was a strategy to attract more customers.

This strategy appears to be producing results. In an August report, Counterpoint Research projected that Huawei's smartphone shipments this year would increase by about 8%, while shipments from other Chinese companies could decrease by as much as 34%.

Huawei is aiming to push annual sales of its tri-fold smartphone, the Mate XT 2, to more than 1 million units this year. In particular, the company plans to expand premium smartphone sales in overseas markets, including the Middle East and Europe.

Huawei's net profit in the first half of this year fell by 36%. One contributing factor to the increased cost burden was the company's extensive stockpiling of raw materials in anticipation of rising costs.

This content was produced with the assistance of AI translation services.