Huawei Reportedly Prioritising AI Chip Production Amid Rising Demand, Slows Down Mate 60 Smartphone Manufacturing

Highlights

• Huawei shifts focus to AI chip production due to increased demand.
• Mate 60 smartphone production slowed, impacting handset business.
• Huawei’s AI focus leads to stock shortages and delayed deliveries.
• Despite US sanctions, Huawei regains lead in Chinese smartphone sales.

Huawei, the Chinese technology giant, has slowed down its manufacturing operations, focusing more on artificial intelligence (AI) chips due to rising demand and facing production constraints.

This shift has led to a slowdown in the production of its premium Mate 60 smartphones, a direct competitor to Apple’s iPhone.

According to a Reuters report, this adjustment comes amid a global tech race for AI capabilities and a tense Sino-U.S. technology standoff, placing Huawei’s handset production in a secondary position for the first time in over three years despite leading in Chinese smartphone sales.

Huawei’s Shift in Production

Huawei’s Ascend AI chips, which share production facilities with the Kirin chips powering its smartphones, have been affected by low yield rates, which show a challenge in maintaining production quality.

The Chinese electronics giant’s focus on AI chips over smartphone processors is a response to the increasing global emphasis on AI technology and the U.S.-China technological rivalry.

As such this decision to prioritize AI chip production indicates Huawei’s ambition to lead in the AI space, despite the significant impact of US sanctions that have limited its access to advanced chipmaking tools since 2019, hindering its smartphone business.

Impact on Huawei’s Product Lines

As mentioned the emphasis on Ascend AI chips has implications for Huawei’s range of products, including its Mate 60 smartphones and computing units equipped with Ascend chips, such as the MDC 810 used in advanced driver assistance systems.

These shifts in production priorities have resulted in stock shortages and delayed deliveries, notably affecting Chinese automakers as well.

Despite these challenges, Huawei is still advancing its chip manufacturing capabilities, particularly the development of a chip capable of 5G speeds for the Mate 60 series.

Huawei Leads Chinese Smartphone Sales

In more news, Huawei has regained its position as the leading smartphone brand in China during the first two weeks of this year, as reported by Counterpoint Research.

This achievement marks Huawei’s return to the forefront of China’s smartphone market for the first time since being impacted by US sanctions in May 2019.

The popularity of the Mate 60 Pro 5G, featuring the Kirin 9000S processor and HarmonyOS, is being touted as the reason for Huawei’s turbo-charged sales, which overcame challenges from US restrictions.

Despite this success, Huawei continues to face intense competition from Apple, Xiaomi, Oppo, and Vivo in the highly competitive Chinese market.

FAQs

Why has Huawei slowed down its Mate 60 smartphone production?

Huawei has shifted its manufacturing focus towards AI chips because of rising demand and production constraints, affecting its Mate 60 smartphone production.

What challenges is Huawei facing in its production operations?

Huawei is dealing with low yield rates for its Ascend AI chips, indicating difficulties in maintaining production quality, alongside impacts from US sanctions limiting access to advanced chipmaking tools.

How has Huawei’s production shift affected its product lines?

The emphasis on Ascend AI chips has led to stock shortages and delayed deliveries for its Mate 60 smartphones and other products like the computing unit MDC 810.

What has enabled Huawei to lead Chinese smartphone sales again?

The launch of the Mate 60 Pro 5G with the Kirin 9000S processor and HarmonyOS, coupled with strong brand loyalty among Chinese consumers, has helped Huawei top smartphone sales in China.

Has Huawei ranks first in smartphone sales in China in early 2024, surpassing Apple?

Recently IDC report revealed that Huawei’s shipments increased by 36.2% in Q4, 2023 making it the fourth-largest smartphone brand in China.

A new report by Counterpoint Research now reveals that Huawei has clinched the top spot in smartphone sales during the first two weeks of 2024.

Not just it has surpassed Apple, but also it’s the first time since the 2019 US ban that Huawei has secured the leading position in terms of smartphone sales in China.

Mate 60 series is the key to Huawei’s recent success in the Chinese market. Launched last year, the smartphones feature a Kirin 9000S processor and Harmony OS operating system.

Mate 60 series is still said to be in high demand in the mainland, according to local distributors.

What are the future plans of huawei?

The company has ambitious plans to launch Harmony OS NEXT; an operating system with Huawei’s own kernel which will phase out Android app support completely.

Expected to launch by the end of 2024, its success will have a significant impact on Huawei’s smartphone business.

Except for the Mate 60, the Nova 12 series launched back in December has also helped Huawei to increase its sales numbers.

These are all mid-range smartphones powered by Kirin processors, except for the Nova 12 Lite which has a Snapdragon 778G 4G chip inside.

According to a Counterpoint report, the high-end smartphone market in China saw a growth of 27% in 2023.

While Apple continues to hold the top position, Huawei and other Chinese brands have been gradually chipping away at Apple’s market share since the third quarter of 2023.

Also Read: Huawei Mate 60 Series Faces Overwhelming High Demand Amid 5G Chip Breakthrough

Also Read: iPhone 15 Pro Max Leads in China’s Smartphone Market, Surpassing Huawei Mate 60 Pro