Huawei’s Mate 60 vs. iPhone 15: supply chain faceoff

April 25, 2024

This week, once again, Yole Group pursues its investigations with a deep dive into the supply chain for the two leading smartphone manufacturers, Huawei and Apple. This article is another building block of Yole Group’s knowledge in the consumer field and semiconductor technologies.

For Yole Group’s Consumer Teardown Tracks, Phone Module, experts dismantle over 120 systems per year, selecting the latest and most innovative systems available on the market. Teardowns of all flagship smartphones are usually available a few weeks after their commercial launch.

With the Huawei Mate 60 Pro just unveiled, the market research & strategy consulting company reveals the specificities of each supply chain and offers a valuable comparison. This article is based on a recent and detailed teardown of the highly anticipated Huawei Mate 60 Pro conducted by Yole Group’s analysts.

This raises questions about China’s standing in the global semiconductor sector following the technology ban, as well as Huawei’s strategies in navigating its supply chain, and technological decisions for its latest handset offerings.

Previous story – From Mate 30 Pro 5G to Mate 60 Pro: A Technology Path from China

The mobile handset supply chain faced multiple crises

From 2018 to 2022, the whole mobile phone industry had to live through a triple crisis:

Huawei ban crisis – announced mid-2019 and enforced end 2020.

The initial US measures targeting Huawei were driven by concerns that the tech giant could use its substantial presence in the world’s telecommunications networks to spy for the Chinese government. These measures led to blocking access to advanced node chips, particularly those needed for Huawei’s mobile handset business.

COVID-19 crisis –increased consumer electronics spending in 2021 and 2022.

In February 2020, the entire world went to battle this pandemic; most Western countries had temporary but severe lockdowns compensated by helicopter money to keep economies afloat. Unable to spend freely while being compensated, Western consumers have had a temporary extra budget to spend once their countries reopened.

Inflation crisis – increase in the average selling price of mobile handsets in 2022 and 2023, now returning to normal in Q1-2024

As the dollar inflated, raw material prices increased, and supply chain shortages arose simultaneously; therefore the prices of end-products rose sharply, in particular mobile & consumer electronic items.

These events did not have the same consequences for the leading mobile players of that time. Apple, Samsung, and Huawei. They were very favorable for Apple and Samsung, mainly on the revenue side. On the contrary, this turn of events led to the collapse of Huawei’s mobile division, which led to significant consequences for the semiconductor ecosystem.

In 2020, the US hit at the heart of Chinese dependency by cutting access to the smartphone brain, the APU. Chinese OEMs such as Huawei were eager to access the latest technology but had no domestic supply chain for this most crucial component. The Huawei ban led to a reorganization of the Chinese supply chain, which had to supply this locomotive of semiconductor technology: mobile processing APUs. Huawei’s domestic partner SMIC had to push forward the evolution of its 14nm process to the 7nm node, which was delivered for the Mate 60 Pro.

Previously, Yole Group examined Huawei’s supply chain development (Article). In this first article, we explained how Huawei’s supply chain turned temporarily toward U.S. semiconductor players before it could significantly rely on domestic Chinese players for the Mate 60 Pro, specifically for the APU and baseband processor.

For a comprehensive grasp of the situation, we can now compare the flagship phones’ supply chains of both Apple and Huawei. Today’s focus shifts to how the Mate 60 Pro stacks up against the Apple iPhone 15 Pro. Yole Group’s Consumer Teardown Tracks, Phone Module provides the answer.

Mate 60 Pro vs iPhone 15 Pro supply chain: what can you expect?

It is not surprising that the Apple iPhone 15 Pro supply chain is heavily tied to U.S. semiconductor device players and Huawei’s to China-based players. What is impressive is the ability of the Huawei Mate 60 Pro to reach the same level of local integration in semiconductors.

Both phones bear the same number of ICs in the range of about 115 devices.

Of these, 69 design wins, therefore 51%, are from mainland China for the Huawei Mate 60 Pro. This is about the same – only slightly below – as in the Apple iPhone 15 Pro with 63 design wins, 45% from US-based semiconductor players.

These two mobile phone OEMs are now essentially serving – but also dependent on – their domestic semiconductor device players. This is totally true for the US through the tie between the U.S. semiconductor device players and Apple, the ultra-dominant player in the mobile phone market. This is now also partially true for China, as exemplified by Huawei; other Chinese OEMs still depend on imports for all their critical components.

What does this mean for the future of semiconductors?

Semiconductor re-localization is a worldwide effort. Indeed, this is also a symmetrical and tactical move from the United States and China, and the mobile market is a good example of the forces at play.

Semiconductor device industry – 2018-2022 facts

U.S. semiconductor device companies have gained about $75 billion in annual revenue, growing from $225 billion to $300 billion. This represents 53% of the whole semiconductor device industry.

Korean revenue stagnated at around $100 billion due to the memory bubble bursting.

European companies rose to 3^rd position thanks to the increasing position of the automotive semiconductor players with a 10% market share.

Japan maintained its position at almost the same level as European companies.

Taiwanese and Chinese players have similar revenues and remain on a growth curve.

In 2022, the mobile application represented about 35% of semiconductor device revenues at $192 billion. This mobile semiconductor device market is, therefore, crucial for all countries that want to play a significant role in semiconductors. As an example, a 10% pts market share gain by Apple phones in the last three years translated into a $20 billion gain for its semiconductor supply chain.

What has been true for the U.S. industry in the past may also become true for mainland China in the next few years. China’s share of the world semiconductor industry was about 4% in 2022. The supply chain analysis as unveiled with the Huawei Mate 60 Pro, has the potential to double China’s semiconductor industry, leading to an 8% to 10% market share. This is highly dependent on the success of this handset and other industrial aspects. This overall conclusion is built from a string of meaningful teardowns and market analyses.

Having accumulated over twenty years of expertise, analysts at Yole Group meticulously select the most cutting-edge electronic systems available in the market. They research and evaluate technological advancements and pricing daily, offering thorough breakdowns and estimated manufacturing costs. Their comprehensive component identification is complemented by high-resolution photographs for meticulous examination.

In the following weeks, Yole Group will continue their investigations, delving into OEMs’ technical choices for their latest products, including the leading Chinese player, Huawei. Concurrently, smartphones from industry giants like Apple, Samsung, and others will undergo meticulous analysis and comparison.

Stay tuned on yolegoup.com!

About the author

Pierre Cambou, MSc, MBA, is Principal Analyst, Global Semiconductors, at Yole Group.

Pierre’s mission is dedicated to market & technology analyses of the semiconductor industry. At Yole Group, Pierre has authored numerous market & technology products. Acknowledged as an expert in the semiconductor industry, he is regularly interviewed and quoted by leading international media.

Previously, Pierre held several positions at Thomson TCS, which became Atmel Grenoble (France) in 2001 and e2v Semiconductors in 2006. In 2012, he founded a semiconductor startup that was later acquired by Wx Solutions.

Pierre holds an engineering degree from Université de Technologie de Compiègne (France) and a Master of Science from Virginia Tech. (VA, USA). Pierre also graduated with an MBA from Grenoble Ecole de Management (France).