Huawei to improve supply of all key smartphone components
World’s largest telecommunications equipment supplier is working out how its supply chains can be improved, including making many of its own parts
Huawei Technologies, the world’s largest telecommunications equipment supplier, is fleshing out plans to improve the supply of all its key smartphone components, after a shortage of advanced flash memory systems stifled its pace of production, causing customer complaints.
“After looking into the [flash memory] incident, we have determined to solve the shortage issues within our own supply chains,” Yu Chengdong, Huawei’s consumer business group chief told media in Shenzhen.
“We are laying out plans for all our key smartphone parts. Huawei might not manufacture these components directly, but it doesn’t mean we do not own the technology to manufacture them ourselves,” said Yu.
He was responding to a recent row regarding Huawei’s flagship model P10 and its variant P10 Plus, which were found to be equipped with two types of flash memories, including eMMC card and Universal Flash Storage (UFS) card.
The speed of UFS storage is up to three times higher than eMMC memory, which is crucial for playing the high-resolution games and media contents.
However, the company’s supply of UFS became limited over the past few months after the South Korean conglomerate Samsung, which designed and shipped the advanced memory parts, also started installing them into its own newest flagship, Galaxy S8 models.
Yu denied criticism from some consumers, who had claimed Huawei was shipping its latest handsets with cheaper flash memories, as a result.
He underlined that because of the UFS shortage, Huawei had been using mixed memories for P10 versions but stressed the company had optimised its design to ensure performance of the handsets was not compromised in any way, even though were only equipped with eMMC memories.
“The price difference between an eMMC and UFS storage is only around 40 to 50 US cents each, so there is no reason for Huawei not to use eMMC memory only if the supply of UFS storage is sufficient,” Yu told more than a hundred reporters during the firm’s first ever Open Day in Shenzhen.
He added that over 97 per cent of smartphones in the market are equipped with eMMC storage.
But after the incident, Huawei has reaffirmed that it needs more control over its whole supply chain by developing core technology for all its own smartphones.
Yu, who also acts as Huawei’s mobile chief, added it is was now shipping more than 100 million smartphones annually, and so components supply has never been so crucial.
The latest industry data from IDC, the market intelligence firm, shows Huawei has further consolidated its third place global smartphone ranking after it shipped 34.55 million units in the first quarter, up 21.6 per cent from the same period last year.
Huawei was the first Chinese smartphone company to produce its own chip, the Kirin range, to smash the monopoly enjoyed by US processor-maker, Qualcomm.
In February this year, another Chinese brand Xiaomi also launched Surge S1, the company’s first ever processor, which was reportedly to have cost more than 1 billion yuan in research and development.
Most key smartphone components, however – such as screens and flash memory cards – are mostly still controlled by foreign brands, leaving Chinese companies, especially those producing mid- to high-end phones, with the image that their models are inferior.
More expensive handsets also generate higher profits than budget phones.