August 24, 2020
Consequences Of A Huawei Smartphone Ban Will Translate Into Higher Prices For Devices
‘Bleak but salvageable’: Huawei has limited options as U.S. sanctions cut off supply to smartphone chips
Key Points • Huawei is reportedly running out of its own high-end chips for smartphones due to U.S. sanctions.
• The company has very few options left to obtain its high-end Kirin chips, according to analysts, and those options could face “major challenges.”
• The outcome of the U.S. election in November could also be a key factor in whether Huawei’s smartphone division survives or not.
China’s role in the global economy over the last 20 years as an outsourced manufacturer has meant that there has been a global deflationary impact on prices.
Everything from T-Shirts to Shoes to Automotive Parts to more advanced manufactured equipment has been moved to China.
The impact for the world has been lower prices and even lower prices associated with highly attractive Chinese Government export financing.
We’ve already commented on numerous occasions of the role that Huawei has on 5G network infrastructure costs. See our previous postings : https://www.mobilityview.com/media/related-links
What we haven’t discussed is the pricing consequences of Huawei’s Smartphone business and how they have been forcing mobile OEMs to keep a lid on pricing.
Very simply Huawei makes a conscious decision to price Smartphones at a roughly 20% to 30% discount to their in-category competitors.
Should Huawei be cut off from access to chipsets then Smartphone prices will increase quite substantially.
You could see these price increases hit as soon as Christmas; and definitely into the New Year.
One of the few things that Democrats and Republicans agree on is China and if there is a change in Administration it may not change thinking on China.
Given the TikTok development, we anticipate that all Chinese Smartphone OEMs will be affected.
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