Apple Planning To Introduce First 5G iPhone By 2020Apple Planning To Introduce First 5G iPhone By 2020

Today (May 17) is the 51st World Telecommunication Day. From hand-held phones to smartphones, communication equipment reduces communication costs and shortens the distance between people. If someone asks you, what are the most influential electronic products in the past decade? The smartphone must be your answer.

In 2010, while Nokia was still standing on the top of the mountain, Steve Jobs released the iPhone 4 at the US Convention and Exhibition Center. Since then, smartphones have entered the Apple era. Until the third quarter of 2019, according to data released by Counterpoint Research, Apple was still able to take 66% of the global smartphone market net profit. In ten years, Apple’s stock price has increased tenfold, becoming the world’s most valuable listed company.

The second decade of the 21st century belongs to Apple. But Chinese smartphone brands have also left a wonderful history of development. From the “ZTE-Huawei-Coolpad-Lenovo” in the 3G era to the “Huawei-Xiaomi-O&V” (O:OPPO, V:VIVO) in the 4G era, Chinese smartphone manufacturers have not only established a foothold in the domestic market but have also begun to seek overseas articles to open up a second battlefield.

The time is coming in 2020, the 5G wave is sweeping, and the smartphone industry has already evolved from a race to an oligarchy. Affected by unfavorable factors such as the epidemic situation, when the increase in the global smartphone market has stagnated, the battle for the stock market has become crueler. As of now, all four Chinese smartphones brands (Huawei-Xiaomi-O&V) have offered new tactics to further seize market share, while “small and beautiful” brands such as OnePlus and Meizu are also striving to build their own moats.

For the smartphone itself, more advanced 5G chips, more powerful imaging systems, higher refresh rate screens, and parameter upgrades make the Chinese replacement of core technologies imperative. The latest data from IC Insights shows that in the first quarter of 2020, Huawei HiSilicon was among the top ten semiconductor companies in the world for the first time, and Harmony OS will gradually be applied to Huawei smartphones in the future. In addition, Xiaomi and OPPO are also putting more effort on self-developed chips.

As the 51st World Telecommunication Day comes, this article attempts to use data to restore the existing status of Chinese smartphone manufacturers.

1.      The Truth You Don’t Know: Four Out of the Top Five in the Indian Market are Chinese brands

A few years ago, many Chinese users were still mocking Lei Jun’s “crappy” spoken English when promoting products in India. When the stem of “Are you OK?” exploded on the Internet, Xiaomi had already quietly taken the top spot in the Indian market. According to the IDC’s recent report on the Indian smartphone market in the first quarter of 2020, Xiaomi’s shipments in the Indian market reached 10.1 million units, an increase of 3.4% year-on-year. Its market share exceeded 30% for the first time, and it has ranked first for 11 consecutive quarters. It has become a big winner. VIVO and OPPO are also striving at the same time. Among the top five smartphone brands in the Indian market, Chinese brands have occupied four seats.

In another important emerging market, Transsion Holdings has dominated in Africa with a successful localization strategy. In 2019, Transsion’s market share in Africa reached 52.5%, ranking first. However, it is worth noting that the shipment of smartphones in the African market only accounts for 41.1% of the total cell phone shipments. The replacement of smartphones with feature phones in the future is an important factor driving the growth of the smartphone market. As Huawei, Xiaomi, OPPO and others increase their investment in the African market, Transsion’s market share in Africa is at risk of being eroded.

In addition, Chinese smartphone brands have successfully won another populous country, Indonesia. In the first quarter of this year, Vivo and OPPO have surpassed Samsung to become the top two in the Indonesian market.

However, in the mature markets of Europe and the United States, the advancement of Chinese smartphones has been somewhat tortuous. Huawei took the lead in breaking the European market. After nearly ten years of hard work, its market share has ranked among the top three. However, after May 2019, Huawei’s uptrend was frustrated in the European market due to the inability of new phones to carry Google GMS services. And most of its lost market share was divided between Xiaomi and Samsung. In the first quarter of 2020, Xiaomi bucked the trend in the smartphone market in Western Europe, with shipments up 79% year-on-year and a market share of 10%.

In addition to Xiaomi, OPPO is also a Chinese smartphone manufacturer that entered the European market earlier. OPPO said that its sales in Europe have doubled in 2019. so far, it has entered 11 European countries. In 2019, the proportion of OPPO shipments in overseas markets was greater than 50% for the first time.

The US market has long been dominated by the three giants of Apple, Samsung and LG, and is dominated by major operators. Due to cultural background and consumption differences, as well as patents and other issues, many Chinese smartphone brands will encounter resistance in the US market. However, what is surprising is that a few niche brands in China have opened up sales in the US market. According to the statistics of the US smartphone market in the first quarter of 2020 released by Counterpoint, while the sales of major manufacturers fell, OnePlus‘ sales rose by 2% against the market, becoming the only brand with rising sales.

2.      The truth you don’t know: Apple takes 66% of total profits in the smartphone industry

From “OEM” to “brand”, from “manufacturing” to “creation”, Chinese smartphone manufacturers have overtaken Samsung and Apple in market share. However, behind the “high-selling progress”, “small profits but quick turnover” is still the shackles of Chinese smartphone brands that are difficult to get rid of. According to data from Counterpoint Research, in the third quarter of 2019, Apple won 66% of the profits of the entire smartphone industry. Of the remaining 34% of the cake, Samsung took another half (17%) and the remaining 17% of profit was divided by other smartphone manufacturers.

The direct reason why Apple can get such a high profit is its high price. Looking back at the history of smartphone development, Jobs released the iPhone 4 in 2010, and the price was $599. After Cook took the helm at Apple, whether it was the iPhone 6 series in the era of large-screen smartphones or the iPhone X series in the era of full-screen smartphones, the highest starting price is basically more than $599.

Starting price of flagship models of some smartphone manufacturers

The reason why the iPhone is sold at such a high price is certainly supported by leading industrial design, powerful A series chips, and smooth and stable iOS system. But compared with Android flagship phones, Apple’s brand premium is more obvious. In fact, every iPhone product before the iPhone 11 series has a greater competitive advantage than the Android camp in the same period. And Apple has also adopted an aggressive skimming pricing strategy – that is, using higher product quality in order to reap the greatest commercial benefits in a short period of time.

Before the release of each generation of iPhone, Apple would lay a lot of expectations in the hearts of consumers. And the high price after the new product launch and the matching product quality have also made more people recognize the high-end positioning of the iPhone. Apple got more profit from consumers, and naturally has more incentive to develop new products to form positive feedback for enterprise development.

In fact, in the context of the smartphone market’s transition from incremental to stock, Chinese manufacturers that relied on price advantage to seize market share in the early years also urgently need to improve profitability, jump out of the “cost performance” bottleneck, and create their own brand core competition. Anyway iPhone’s high-end pricing strategy in the past few years did indeed leave room for Chinese smartphone manufacturers to develop. However, even for the main smartphone manufacturer Xiaomi or Huawei with label of “cost-effective”, it is hard to expect a rough competition with Apple in the high-end field. But Huawei has borrowed from Apple’s strategy to create high-end products. In 2014, Huawei’s smartphones used HiSilicon’s Kirin chips for the first time; in 2015, Huawei launched a joint product with Leica for the first time. Since then, Huawei has begun to work hard in the high-end field.

After the release of the iPhone X series in September 2017, the iPhone had few revolutionary innovations. After 2017, Huawei has established its foothold in the high-end field with the P series that focuses on video and the Mate series that focuses on “Black Technology”.

Time is coming in 2020. The price of Apple’s iPhone 11 series has coincided with the pricing of high-end models of Chinese smartphones. The newly released iPhone SE 2 has lowered the threshold of the iOS ecology to the price of $399. The high-end road of Chinese smartphone manufacturers is also getting smoother: In addition to Huawei’s P series and Mate series, the Xiaomi Mi 10 series, the OPPO Find X2 series, the Vivo NEX 3 series, as well as the OnePlus 8 series and the Meizu 17 series were released. They confronted Apple and Samsung in a similar price segment.

Since 2020, the outbreak of the epidemic has suddenly cooled the global smartphone market, and after experiencing rapid and frequent technological iterations in the past, the innovation of product hardware has no more amazing feeling. In terms of appearance, the gradient back cover and the more and more uniform design have made people feel aesthetically fatigued, the high-refresh rate and high-resolution screens that have become commonplace have long been applied to computer monitors. As for the video system that is regarded as the focus of publicity by various smartphone manufacturers, it is difficult to widen the gap. On the processor side, Qualcomm, Apple, and Huawei HiSilicon are basically the main players. The overflow of smartphone performance is no longer a new topic.

In contrast, the folding screen smartphone is the most eye-catching new form on the market. But it is difficult to mass-produce. The price of Huawei Mate Xs has been speculated to 50,000 or 60,000 yuan ($7040 – $8448), but it is still difficult to get one. However, revolutionary new technologies such as off-screen cameras are immature, and large-scale applications are still awaited.

Therefore, when the innovation of smartphone technology seems to be somewhat unsuccessful, with the landing and popularization of 5G technology, players in the industry almost all focus on the technical upgrade of commercial 5G. There is no doubt that 5G has become the largest increment in the smartphone market.

3. The truth you don’t know: Huawei HiSilicon has ranked among the top ten semiconductor companies in the world

2020 is regarded as the year of popularization of 5G smartphones, this June will also mark the first anniversary of China’s 5G commercial use. At present, in addition to Apple, many smartphone manufacturers including Samsung, Huawei, Xiaomi, Vivo, iQOO, OPPO and Realme have successively released new 5G phones.

According to Yu Chengdong, CEO of Huawei’s consumer business, as of January 2020, Huawei’s 5G smartphone shipments have exceeded 10 million units. At the same time, Vivo is also quite aggressive in the field of 5G. Following the release of 5G products such as the iQOO Pro 5G, Vivo NEX 3, and X30 series in 2019, a number of 5G products have been intensively released under the influence of this year’s epidemic. So the market is fully covered. The price of 5G smartphones may also drop gradually. Wu Qiang, vice president of OPPO and president of global sales, said: ‘By the second quarter of 2020, there will be 5G smartphones ranging from 2,000 yuan to 3,000 yuan before the summer vacation, and even 5G smartphones from 1,500 yuan to 2,000 yuan by the end of the year.

Regardless what a market we are talking about Chinese or global, with the continuous expansion of the network coverage of the 5G commercial areas that have been launched,more countries and regions joining the ranks of 5G commercial, 5G smartphones will become the main sales force in the global smartphone market this year.

Although the 5G smartphone market is large, it also has a higher threshold to divide cakes in this market. For example, the 5G baseband and module of the mobile terminal must be compact and power-saving, and also compatible with complex systems such as 2G, 3G, and 4G, only manufacturers with advantages in 5G underlying technology development and 5G standard formulation can run in the first camp of 5G smartphones.

In 2019, OPPO CEO Chen Mingyong announced that ‘50 billion yuan will be invested in R&D in the next three years, and will continue to focus on cutting-edge technologies such as 5G / 6G, artificial intelligence, AR, and big data, as well as build the most underlying hardware core technology and software architecture ability’. Xiaomi President Lei Jun made it clear in the New Year’s employee internal letter in early 2020 that 2020 is a key year for the ‘5G + AIoT’ dual-engine strategy and will invest at least 50 billion yuan in related technology research and development in the next five years. Similarly, in terms of R&D investment, Vivo has no upper limit on the number of R&D personnel and capital investment in technology.

In the view of Canalys analyst Jia Mo, although there are many 5G smartphones in China, the 5G industry chain is still immature and requires operators, communication equipment manufacturers, chip manufacturers, smartphone manufacturers and other upstream and downstream parties to jointly promote. Among them, the chip is crucial.

“Most manufacturers do not want to rely solely on a single 5G chip supplier, which has formed the current 5G chip cooperation between Vivo and Samsung, OPPO and Qualcomm, and Xiaomi and MediaTek. Huawei, which has its own solution, has also been occupied a more proactive strategic position. At the same time, other manufacturers such as ZTE are also vigorously developing their own chips with a view to rising in the 5G tide.’ Jia Mo said.

The investment in chip technology will undoubtedly build long-term competitiveness for smartphone manufacturers to continue growing in the future. In May 2019, the US Department of Commerce included Huawei on the ‘Entity List’. In the face of technological blockages and hardware supply cuts by overseas manufacturers, from HiSilicon’s self-developed chips to Harmony OS, as well as key components, Huawei is accelerating the pace of domestic substitution.

Yu Chengdong once said that at present, Huawei can no longer use components from the United States, but Huawei smartphones are not all domestically produced at present. There are components from China as well as Japan, South Korea, and the United States, different smartphone has different configuration. ‘Huawei has cooperation with MediaTek, Qualcomm, Spreadtrum, etc. We still use our own (HiSilicon) chips in our high-end products, and Spreadtrum products are used in smart watches. Although we don’t need to use American components, we still need to ensure that we have American components because we want to maintain a cooperative relationship with them.’

In fact, Huawei is accelerating the creation of a self-sufficient chip supply chain. Huawei’s HiSilicon has designed more than ten advanced process chips, and a large number of them have been handed over to TSMC. According to statistics from TSMC’s annual report and statistics from IC Insights, Huawei HiSilicon’s share of TSMC’s annual revenue last year has increased significantly to 14%. The industry estimates that Huawei will account for 15% to 20% of TSMC’s revenue this year, narrowing the distance to Apple.

In addition, on April 28, the latest data released by the research organization CINNO Research showed that in the first quarter of 2020, Huawei HiSilicon toped the Chinese smartphone processor market for the first time, becoming the largest mobile SoC manufacturer in mainland China. The data released by IC Insights shows that Hisilicon’s first-quarter sales were close to US $2.7 billion, making it among the top ten semiconductor manufacturers in the world for the first time. It is reported that in the past, Huawei smartphones will be equipped with HiSilicon and Qualcomm processors respectively according to different product lines, but now, more than 90% of Huawei phones use its own HiSilicon Kirin processor.

In addition to Huawei, more and more Chinese smartphone manufacturers such as Xiaomi and OPPO are on the road to self-developed chips. According to media reports, OPPO’s chip business plan is called the “Mariana Plan”, and a chip TMG (technical committee) has been established to ensure investment in self-developed chip technology.It is responsible for internal and external resource coordination and key project reviews. (The head of the committee had previously worked at Qualcomm as a technical director.)

For the 5G era, Chinese smartphone manufacturers will increase their R&D investment and they will change the current profit distribution pattern. Jia Mo analyzes and believes that having their own chips can further help manufacturers differentiate their products and enhance their competitiveness. ‘The US ban on ZTE in 2018 and the inclusion of Huawei in the entity list in 2019 by the United States have caused a certain impact on Chinese technology companies. Improving independent technology and patent strength is already a direction that all smartphone manufacturers need to overcome in the future. Standalone chips can further help manufacturers differentiate their products and enhance their competitiveness. For example, Huawei can flexibly bring 5G smartphones to the market without the restrictions of Qualcomm and MediaTek.

However, Jia Mo also pointed out that investing in chip R&D is not a one-time effort, in the short term, it is difficult to make a profit, it requires manufacturers to make long-term planning and a lot of investment. ‘Chips are very important to strengthen manufacturers’ long-term technical reserves and build a moat. At the same time, in the context of continued tight trade between China and the United States, the layout of the chip field can also greatly enhance manufacturers’ ability to avoid risks.’

The Bottom Line

For ordinary consumers, smartphones have become an indispensable mobile terminal in life. Sitting in such a huge consumer market, smartphone manufacturers are undoubtedly lucky.

In the last decade, the history of the rise of Chinese smartphones is destined to be talked about by future generations. When the iPhone and Samsung dominated the high-end market, the Chinese smartphone manufacturers represented by “Huawei-Xiaom-O&V” were just enduring hardships and never stopping learning and progressing.

Today, various manufacturers have also launched high-end models that can compete with Apple, and the arrival of 5G may be a good opportunity for them to overtake in the corner. However, the core technology of the two key software and hardware of the smartphone, the operating system and the processor, has not yet achieved complete self-sufficiency. Today, Chinese smartphone brands have been sold at home and abroad, but it will still take time for key software and hardware to be fully localized.

This article originally comes from tech 163

Argam Artashyan

By Argam Artashyan

Back in 2010, he was dismissed from his position as a lecturer at the university. This made him get another job at his friend’s digital marketing company as a blog writer. After a few years, when he was thinking the article writing is his mission, Google pushed the Panda update and affected the company and websites he was working at. (Un)fortunately and surprisingly, he got an offer to head a large knitting factory. In 2016, he got his Ph.D. and resumed teaching at the University … and writing tech-related articles following his passion.