Huawei was forced to withdraw from the high-end market due to the U.S. restrictions on the supply of 5G chips. In the past two years, domestic mobile phone manufacturers have rushed to the high-end market, trying to occupy the market share vacated by Huawei. Xiaomi, OPPO, vivo, and Honor have been thriving by piling up hardware, co-branding, and marketing.

A common feature is that mobile phone manufacturers generally launched sub-brands that take the cost-effective route (such as Xiaomi's sub-brand Redmi, OPPO's sub-brand Realme, and vivo's sub-brand iQOO), while the parent brand turned its course to target the high-end market. However, this trend was soon strongly sniped by Apple. The strong momentum of the iPhone 13 series dealt a heavy blow to domestic mobile phones.

Data shows that after the release of the iPhone 13 series, Apple ranked first in sales in the Chinese smartphone market in October 2021. This is the first time it has returned to the top spot in China since December 2015. In November 2021, Apple continued to rank first in the Chinese market, with a market share of 23.6%.

In addition, Apple surpassed Xiaomi in the third quarter of 2021 and regained the second place in global sales. Due to the positive impact of the sales boost of new products, Apple's total market value once exceeded 3 trillion US dollars in the early morning of January 4, 2022, becoming the world's first company to enter the 3 trillion US dollar club.

"Xiaomi's market share declined in the third quarter (2021), mainly due to the strong performance of iPhone 13." Wang Xiang, president of Xiaomi Group, said this at the third quarter 2021 earnings call.

As we all know, Apple's iPhone takes three-quarters of the profits in the global mobile phone industry. Apple has become the second-largest seller in the world just by selling mid- to high-end iPhones (the cheapest phone on Apple's official website is the iPhone SE, priced from 3,299 yuan), which is enough to show its unshakable position in the high-end market.

On the other hand, after Huawei, no domestic manufacturer can stop Apple's offensive in the high-end market. One prominent manifestation is that after the release of the iPhone 13 series in 2021, the prices of domestic mobile phones began to "dive" wildly in the primary and secondary markets.

The reason is that as the mobile phone hardware arms race continues to escalate, domestic mobile phone manufacturers who lack hardware autonomy and whose core supply chains are controlled by others are finding it increasingly difficult to make breakthroughs in product strength.

If the core supply chain issues are not resolved, domestic mobile phone manufacturers will only become increasingly passive in the next generation of computing devices represented by AR/VR, which have more extreme performance requirements.

By taking the initiative, Apple has disrupted the strategic pace of domestic manufacturers in their efforts to enter the high-end market.

On Double 11 in 2021, the price of Xiaomi Mix 4, the flagship smartphone released by Xiaomi in August, dropped by 1,000 yuan, from 4,999 yuan to 3,999 yuan. The news of the price reduction even ranked second on Zhihu's digital hot list.

In this regard, many users who bought Mix 4 at the first launch complained on social networking sites: "Who will buy the first launch in the future after the price is reduced by 1,000 yuan on Double 11? Is the high-end positioning going to damage the brand so much?" "I believed Lei Jun when he said Xiaomi only makes 5% profit. Is the price reduced by 1,000 yuan selling at a loss?"

In fact, the low value retention rate of Android phones and the "diving" of prices after a period of release have been the norm for many years. However, the price reduction of domestic manufacturers' flagship phones in 2021 is particularly prominent. For example, the price of OnePlus 9 Pro, which started at 4,999 yuan, dropped to 3,799 yuan during Double 11, and the price of vivo's flagship phone X60 Pro+, which started at 4,998 yuan, dropped to 3,999 yuan during Double 11, which made many old users say "the defense was broken".

Faster price cuts and lower selling prices naturally mean loss of profit margins for mobile phone manufacturers, but even so, price cuts for domestic flagship phones have not resulted in a significant improvement in sales.

A report released by market research organization BCI shows that during the two weeks of intensive promotions on Double Eleven (October 25-November 7), Apple's sales in the domestic market were far ahead.

The reason for this is closely related to Apple's proactive price cuts for the iPhone 13 series. This year's iPhone 13 series has increased configuration and reduced prices, and its products are selling well, and the high-end version of the 13 Pro series is continuously out of stock.

It is reported that the official price of the 64GB version of the iPhone 12 released in 2020 is 6299 yuan, while the official price of the 128GB version of the iPhone 13 released in 2021 is only 5999 yuan. In addition, various e-commerce activities on Double 11 provide subsidies ranging from 200 to 500 yuan, which makes many netizens call out: Thirteen spices!

Some people in the mobile phone industry believe that the price reduction of the iPhone 13 series is Apple’s " overt conspiracy". Apple took the initiative to disrupt the strategic pace of domestic manufacturers to impact the high-end market and prevent the emergence of the "next Huawei".

Judging from the sales volume of domestic mobile phone manufacturers and the extent of the price drop of flagship models, Apple's "overt strategy" is very effective. In the domestic high-end market, it is difficult for domestic manufacturers to compete with it.

The problems of supply chain autonomy of domestic mobile phone manufacturers are fully exposed.

Apple has not always had an easy time and difficulty meeting rivals in the high-end market. In 2020, at the peak of Huawei's mobile phone business, it was on par with Apple in the high-end market.

According to IDC data, in the first half of 2020, Huawei and Apple accounted for nearly 90% of the domestic mobile phone market share ranking in the price range of more than US$600, reaching 88.1%. Huawei ranked first with a 0.1% advantage over Apple.

But unfortunately, since Huawei's mobile phones fell from their peak due to the suppression of chips, it is difficult for domestic manufacturers to replace Huawei and compete with Apple.

This is closely related to the technological shortcomings of domestic mobile phone manufacturers.

In terms of screens, core processors, CMOS image sensors, and especially SoC chips, domestic mobile phone manufacturers including Xiaomi, OPPO, vivo, and Honor all rely on the support of the supply chain, while Apple, Samsung, and the former Huawei have all achieved partial independence and self-research. It is for this reason that domestic mobile phone manufacturers (except Huawei) have been criticized as "advanced assembly plants."

Especially in the field of mobile phone SoC, Huawei once relied on its self-developed Kirin 9000 chip to achieve performance comparable to that of Apple's A14 chip. However, as high-end chips were suppressed, self-developed SoC chips became a swan song, and high-end flagships of manufacturers such as Xiaomi, OPPO, vivo, and Honor all adopted purchased Qualcomm Snapdragon SoC chips.

In 2021, when Qualcomm Snapdragon 888's heating problem became prominent and became the "Fire Dragon 888", it has become difficult for Android phones to compete with Apple, which uses the A15 processor, in terms of performance, power consumption and other overall experience, and the problem of supply chain autonomy has been fully exposed.

Specifically, the 2021 Qualcomm Snapdragon 888 chip has problems such as excessive power consumption, high heat generation, and fast battery consumption, which greatly reduces the user experience of domestic high-end mobile phones in 2021.

The mobile phone manufacturer most negatively affected by "Fire Dragon 888" is Xiaomi. Since the release of the Xiaomi 11 series, users have continuously reported that the Xiaomi 11 series has serious problems with heating, burning the motherboard, and burning WiFi. The incident has also been reported by many media outlets.

Even so, the flagship models of domestic mobile phone manufacturers are still dependent on Qualcomm, which is almost the only one in the field of high-end SoC for mobile phones.

Just recently, two domestic mobile phone manufacturers, Xiaomi and Lenovo, had a small "battle" over "who will be the first to launch Qualcomm Snapdragon's new generation SoC", and finally Lenovo's Motorola brand came out on top.

But it is worth pondering that the performance of Qualcomm's new generation SoC Snapdragon 8 Gen1 in terms of power consumption and heat generation has not been much improved compared to the previous generation 888. Many commentators pointed out that the currently available mobile phones equipped with Snapdragon 8 Gen1 generally use frequency reduction, frame locking, and lower resolution to control the heat of the mobile phone, which has a certain discount in the actual experience.

Making chips is a life-and-death struggle.

In fact, the Snapdragon 888 chip is not the first time that domestic mobile phone manufacturers have suffered from Qualcomm. In 2015, Qualcomm's Snapdragon 810 chip was also called the "Fire Dragon" due to its high power consumption and heat generation, which dragged down the product strength of a number of Android flagship phones.

When the core supply chain is controlled by others, it is difficult for mobile phone manufacturers to avoid negative impacts once an accident occurs, and there is great uncertainty behind this.

Perhaps influenced by this, domestic mobile phone manufacturers have long thought of developing their own mobile phone SoCs. Unfortunately , except for Huawei, domestic mobile phone manufacturers have not yet successfully gotten rid of their dependence on Qualcomm's flagship chips.

The Xiaomi 5C phone released by Xiaomi in 2017 was equipped with the self-developed Surge S1 processor, but the subsequent Surge S2 failed in tape-out many times and the chip-making plan was eventually shelved.

It is reported that OPPO's chip subsidiary ZEKU (Zheku Technology) is also developing SoC chips. Some media pointed out that OPPO plans to have TSMC manufacture its 3nm SoC chips. If the development goes smoothly, it will be installed on the flagship mobile phone launched in 2023 or 2024.

Judging from the failure of Xiaomi Pengpai S2 and Huawei's exploration, it is very difficult to develop mobile phone SoC chips by yourself. Research and development of an SoC chip takes at least three years and a lot of money. Lei Jun once described chip manufacturing as "a life and death struggle" in a speech. This is a huge test for the financial resources and courage of mobile phone manufacturers.

However, it is more meaningful to persist in doing difficult but correct things. Self-developed SoC can help mobile phone manufacturers better control the integration of software and hardware, and widen the gap with competitors in experience, especially when Qualcomm's flagship processor product power is insufficient.

从更长远的角度看，下一代的计算平台无论是AR、VR还是元宇宙，其对软硬件的要求都会显著高于 手机。这也对智能设备SoC的性能提出了更高的要求。

Especially the Metaverse. Intel pointed out that the Metaverse may be the next major computing platform after the World Wide Web and mobile phones, but the current computing, storage and network infrastructure are simply not enough to realize this vision. The collective computing power of mankind needs to be increased by at least 1,000 times.

This means that the next generation of computing platforms will have even more extreme requirements for terminal device performance. Only companies that have the ability to independently develop SoC chips and can highly integrate software and hardware will be the winners in the future.

In terms of software and hardware integration, Apple, with its closed iOS ecosystem and powerful A-series chips, is second to none. Google, which develops the Android system, has also equipped its latest Pixel 6 series phones with its own Tensor processor, trying to make up for the shortcomings of SoC chips.

However, domestic mobile phone manufacturers are still relatively dependent on the Android system at the software level, and lack the design and manufacturing capabilities of SoC at the hardware level. If this situation is not effectively improved, the road for domestic mobile phone manufacturers in the competition for the next generation of computing platforms will most likely become narrower and narrower.

With core chips controlled by others, domestic mobile phones may find it difficult to break Apple's dominance in the high-end market. Apple will continue to take three-quarters of the profits in the industry.

This article is reprinted from WAVE, author: Degree.