The Flagship America Can't Have

It’s been quite a while since Huawei were driven out of most global markets by losing out on Google’s services and apps, with market share plummeting in numerous regions as a result. 

However, as the company continue to innovate and dominate sales back home in China, it turns out that Americans wish they could still purchase and use Huawei phones as well. 

Despite a strict US government ban preventing their devices from being sold through official channels, Huawei recently emerged as the top choice for American tech enthusiasts. In a major industry poll conducted by the mobile technology publication ⁠PhoneArena, asking which Chinese smartphone brand consumers would most like to see properly enter the United States with full carrier support, Huawei led the vote with nearly 31 percent of the total selection. 

This strong showing highlights a deep, ongoing demand among premium Android users for the brand's hardware innovation, even as the broader landscape of international smartphone options shrinks. 

This suggests that Americans not only still miss the company but would be willing to give up Google’s services and accept Huawei’s HarmonyOS as well. Huawei have been pushing out some crazy powerful devices with very unique designs and gimmicks, and you want to get your hands on them. 

Getting a Chinese smartphone in the US is a gargantuan hassle, and no channels exist to purchase one like you would a Samsung, Google Pixel, or Apple phone. Most people who do use Chinese phones in the US get an unlocked model and have to use workarounds to have an almost normal experience. 

But from the said reader poll, we now know how much Americans want access to other Chinese brands after Huawei. In second place is Oppo, with a little over 23 percent of respondents wishing that it would be sold stateside. 

Xiaomi followed with 22 percent of the votes, as the company have been pumping out some excellent smartphones in the last few years with spectacular specs and great ideas like a second display on the rear. 

Meanwhile, a little under 12 percent want Vivo to take on Samsung, Google, and Apple in the US. iQOO got over seven percent of the votes and Realme came last with a little under five percent of you wanting it to operate normally in the States. 

Malaysian women's doubles pair Pearly Tan-Thinaah Muralitharan secured their first semi-final appearance since the All England in March with a hard-earned victory at the Taipei Open yesterday. 

The world No. 5 had to work hard for their 21-14, 21-17 win over Taiwan's world No. 39 Lin Chih Chun-Yang Chu Yun in the quarter-finals.

The important thing is they won! 💪💪💪

But young women's doubles pair Low Zi Yu-Noraqilah Maisarah Ramdan's brave run came to an end. The world No. 67 suffered a 21-11, 20-22, 22-24 heartbreak to Thailand's world No. 36 Hathaithip Mijad-Napapakorn Tungkasatan after a titanic battle. 😞😞😞

Apple's Plan to Move iPhone Assembly to India from China Unrealistic.

As Apple grapples with US President Donald Trump’s tariff war with China, they have laid out plans to move to Indian assembly of the majority of iPhones they sell in the US by the end of 2026, a move that would double their current output from the South Asian nation and away from China. 

Eighty percent of the 60 million iPhones sold in the US are produced in China and this proposed shift is a key step that would help them mitigate some of the costs they face amid rising tariffs on China. 

But leading analyst Craig Moffett suggests any plans to migrate US iPhone assembly to India is unrealistic. Moffett, ranked as a top analyst multiple times by Institutional Investor, sent a memo to clients on Friday after the Financial Times reported on Apple's said strategy. He’s questioning how a move could bring down costs tied to tariffs because the iPhone components would still be made in China.

“You have a tremendous menu of problems created by tariffs, and moving to India doesn’t solve all the problems. Now granted, it helps to some degree”, the MoffettNathanson partner and senior managing director told CNBC’s “Fast Money” on Friday. “I would question how that’s going to work”. 

For sure, the switch in production will cost Apple. According to a Reuters report citing an unnamed source, manufacturing iPhones in India is 5-8 percent more expensive than in China. 

“India will help, but it’s not moving the needle on China’s dependence for Apple. It will take years to make this move, as Apple is caught in the tariff storm”, Dan Ives, analyst at Wedbush Securities, pointed out.

And Moffett contends that it’s not so easy to diversify to India – telling clients Apple’s supply chain would still be anchored in China and would likely face resistance. 

“The bottom line is a global trade war is a two-front battle, impacting costs and sales. Moving assembly to India might (and we emphasize might) help with the former. The latter may ultimately be the bigger issue”, he wrote to clients. 

Moffett cut his Apple price target on Monday to $141 from $184 a share. It implies a 33% drop from Friday’s close. The price target is also the Street low, according to FactSet. 

“I don’t think of myself as the biggest Apple bear”, he said. “I think quite highly of Apple. My concern about Apple has been the valuation more than the company”. Moffett has had a “sell” rating on Apple since January 07. Since then, the company’s shares are down about 14%. “None of this is because Apple is a bad company. They still have a great balance sheet [and] a great consumer franchise”, he said. “It’s just the reality of there are no good answers when you are a product company, and your products are going to be significantly tariffed, and you’re heading into a market that is likely to have at least some deceleration in consumer demand because of the macro economy”. 

Moffett notes Apple also aren’t getting help from their carriers to cushion the blow of tariffs.

“You also have the demand destruction that’s created by potentially higher prices. Remember, you had AT&T, Verizon and T Mobile all this week come out and say we’re not going to underwrite the additional cost of tariff [on] handset”, he added. “The consumer is going to have to pay for that. So, you’re going to have some demand destruction that’s going to show up in even longer holding periods and slower upgrade rates – all of which probably trims estimates [in] next year’s consensus”.

According to Moffett, the backlash against Apple in China over US tariffs will also hurt iPhone sales. 

“It’s a very real problem”, Moffett said. “Volumes are really going to the Huaweis and the Vivos and the local competitors in China rather than to Apple”. 

Apple stock is coming off a winning week – up more than 6%. It comes ahead of the iPhone maker’s quarterly earnings report due Thursday after the market close.

iPhone Sales Nosedive in China

My blog post "Apple's iPhone Sales Plummet in China by 24%", published March 06, 2024 looked at sales in the first 6 weeks of this year. 

Counterpoint Research have now reported that Apple’s smartphone sales in China in the first quarter of 2024 dropped 19% due to increased competition from local brands.

The US tech giant fell to third place in the hotly contested market amid pressure from fast-rising rival Huawei, the researcher said on Tuesday. 

Shenzhen-based Huawei saw sales of their smartphones soar a whopping 69.7% in the first quarter, making them the fourth-largest smartphone maker in China.

Overall, China’s smartphone market expanded about 1.5% year-on-year in the first quarter of 2024, marking the second quarter of positive growth for the industry. Vivo became the top smartphone vendor in China during the quarter with a 17.4% share, driven by strong sales of the Y35 Plus and Y36 models in the low-end segment and the S18 in the mid-end segment. Honor ranked second with a 16.1% share, followed by Apple with a 15.7% share.

“Apple’s sales were subdued during the quarter as Huawei’s comeback has directly impacted Apple in the premium segment”, senior Counterpoint analyst Ivan Lam explained. “Besides, the replacement demand for Apple has been slightly subdued compared to previous years”. 

The sales decline highlights the challenges Apple faces in their third-largest market, where some Chinese companies and government entities bar the use of their devices in retaliation to US restrictions on Chinese apps for supposed security reasons.

Analysts anticipate increased pressure on Apple’s sales in 2024. Research firm IDC previously warned that the US tech giant’s presence in China has been dented by rival products and limited product upgrades by Apple, which has reduced the overall attractiveness of iPhones. 

Apple, once the world’s most valuable company, have seen their shares fall 14% this year, underperforming the overall market. Their market valuation is still $2.56 trillion, second only to Microsoft Corporation.

The Russian Ministry of Economic Development have raised their 2024 forecast for the country’s growth, citing domestic consumer and investment demand. 

Gross domestic product will expand by 2.8% this year, Economy Minister Maksim Reshetnikov announced yesterday. This compares favorably with the previous forecast of 2.3% GDP for 2024. The International Monetary Fund, however, expect Russia to grow 3.2% this year (refer my post "Russia To Grow Faster Than All Advanced Economies" published April 17, 2024).

Whether 2.8% or 3.2%, Russia's wartime economy is primed to grow despite the avalanche of sanctions!

Xiaomi Launch Home-grown Cross-device System with HyperOS

Smartphone and gadget giant Xiaomi Corp have become the latest Chinese industry player to unveil a unified operating system for their mobile devices, cars and Internet-connected home products, as US-sanctioned Huawei Technologies work towards liberating their own integrated OS completely from Google’s Android. 

 

Xiaomi described HyperOS, their recently introduced OS, as a combination of a highly customised Android system and the company’s proprietary Internet of Things (IoT) platform Vela, launched three years ago to support a range of smart devices from wristbands and smartwatches to speakers, home appliances and sensors. The Beijing-based firm touted HyperOS as a “human-centric” OS that is a culmination of efforts to bring their vast and expanding product portfolio under the roof of one single OS for centralised and easier management. 

 

HyperOS will come pre-installed on the latest Xiaomi 14 smartphone series, as well as devices launched in the mainland Chinese market, such as smartwatches and televisions, the company said.

 

Xiaomi are not the only Chinese company that have taken a shot at developing a home-grown OS. Huawei Technologies, one of the first domestic handset makers to make such an attempt, are now preparing a bolder move to launch HarmonyOS Next. 

 

Huawei have confirmed that HarmonyOS NEXT will commence official developer beta activities in early 2024, followed by closed and public beta tests before the full public release. 

 

The Next system is Huawei’s attempt to sever their ties with the Android ecosystem by removing support for Android apps on Huawei devices equipped with their new OS. HarmonyOS was launched in August 2019, several months after the US Department of Commerce added Huawei to their Entity List that barred the Shenzhen-based telecoms titan from buying technologies from American companies – including Google apps and services – without Washington’s approval.

 

While the Android Open Source Project is still free for anyone to use, Huawei have been pushing through with efforts to expand the use of HarmonyOS, which was first released on a smart television, to all their IoT and personal devices. But to soften the blow to users, Huawei – which were briefly the world’s top-selling smartphone brand before US trade sanctions decimated their international handset business – have so far allowed Android apps to run on HarmonyOS devices.

 

Android held a roughly 70 percent share of the global mobile OS market in September, according to data service StatCounter, while HarmonyOS had a negligible share.

 

Still, Huawei appear ready to move forward. 

 

“HarmonyOS had four rough years. Looking back now, the light boat has already passed ten thousand mountains”, Richard Yu Chengdong, CEO of Huawei’s consumer business, said at a launch event for HarmonyOS 4 in September, citing a famous line written by ancient Chinese poet Li Bai. 

 

Today, more than 700 million devices run on HarmonyOS, with more than 2.2 million third-party developers creating apps for the system, according to Yu. 

 

Meanwhile, other Chinese smartphone manufacturers continue to build their customised OS on the open-source Android. They include Oppo’s ColorOS and Vivo’s OriginOS.