Huami faces difficulties in 2020, rebirth or death?

At the Huawei Developer Conference (HDC) 2020 held recently, Huawei officially released the latest Harmony OS 2.0, EMUI 11 mobile operating system and HMS Core 5.0 mobile ecosystem base.

Since the beginning of this year, due to the continuous escalation of sanctions, after September 15, Huawei cannot produce its own chips or buy third-party chips. In the short term, there is almost no feasible solution to the "chip shortage" problem. Recently, foreign media reported that non-US companies such as Samsung, LG, and SK have also been asked to stop providing parts to Huawei.

In the short term, Huawei's consumer business, especially Huawei mobile phones, faces huge challenges.

Judging from the content of the Developer Conference, in order to meet the challenges, Huawei is continuously increasing its investment in two major paths: first, the consumer business is accelerating the "8 and N" of "1+8+N", that is, other hardware ecosystems beyond smartphones; second, accelerating the pace of Huawei's software system advancement. Judging from Huawei OpenHarmony's open source roadmap, it is expected that by October 2021, the Hongmeng system will be open source and applicable on all devices including mobile phones.

Huawei's two strategies complement each other, and the future results are worth looking forward to. However, this also means that Huawei's mobile phones, which won the championship in both the global and domestic markets in the second quarter, may give up a huge market share.

MiOV gets new opportunities

In the fiercely competitive smartphone market, Huawei's loss of market share is a rare market opportunity for other giants. Whether in the global market or in the Chinese market, this will be a big piece of cake.

There are many players eyeing this piece of cake, including Apple, whose prices are suddenly very affordable, Samsung, which is trying to return to the Chinese market, Xiaomi, which is starting the "next decade", and OPPO and OnePlus, which are banding together for warmth...

不过相比三星和苹果两大国际巨头，终究还是小米、OPPO 和 vivo 这些国产厂商受益会更加明显一些。在国内市场，华为手机二季度市场份额超过 50%，小米、OPPO 和 vivo 这些国产厂商已经极限承压。之后如果来自华为的压力显著降低，那么其他国产厂商在大大松一口气的同时，也会迎来更加宽裕的发展空间，这就是巨大的市场机遇。

Moreover, this opportunity is not isolated, but together with the commercialization of under-screen camera technology, the popularization of super-fast charging and other new technologies, it will usher in the next decade of the global mobile phone industry in the 5G replacement wave.

For domestic mobile phone giants such as Xiaomi, OPPO, and vivo, opportunities come with huge responsibilities. They have the responsibility to maintain the domestic market and continue to promote the advancement of smartphone technology.

If other domestic mobile phone giants want to inherit Huawei's legacy and seize market opportunities, they must bear these responsibilities. And there is a prerequisite that must be clear, that is, if they want to inherit Huawei's legacy, they must face the "chip" dilemma similar to Huawei.

Successors will also face chip problems

Since 2013, the top three in the global smartphone market have always been Samsung, Apple and Huawei. It is no coincidence that their biggest commonality is that they all have the ability to independently develop (design) SOCs.

In the global smartphone industry, it is an "open secret" that self-developed chips are the ticket to the top club. Although self-developed chips are costly, they can magnify one's own advantages.

For example, Apple's biggest advantage is its closed-loop ecosystem of integrated hardware and software. After achieving self-developed SOC, Apple's own system and software can better cooperate with the hardware to bring a better experience to users. Samsung's biggest advantage lies in its strong hardware supply capabilities. Samsung has wafer manufacturing capabilities second only to TSMC, and self-developed chips can better leverage Samsung's semiconductor advantages.

华为在通讯技术上具备显著优势，尤其是自 2012 年以来不遗余力的推进 5G 标准加速落地，近年来华为 5G 可用专利数量积累至全球第一，在 5G 技术方面已经全面领先，集成在海思麒麟 990 里的巴龙 5000，正是华为通讯技术领先的完美体现。

If Huawei's mobile phone business shrinks and the market share it gives up is taken over by other domestic manufacturers, then if they want to truly compete with Samsung and Apple in the global market, they will have to launch their own chips as soon as possible. Because only by launching their own chips can domestic manufacturers truly have the confidence to compete with Samsung and Apple.

Xiaomi OV is not ready

Unfortunately, Xiaomi, OPPO and vivo were not fully prepared.

Although Xiaomi, OPPO and vivo have been accelerating their layout in self-developed chips, it is too much to ask them to launch a SOC comparable to HiSilicon Kirin flagship level or even a SOC with practical value in the short term.

Xiaomi started developing its own SOC in 2014. After launching the 28nm Surge S1 in 2017, there has been no news about the second generation of its own SOC.

On the eve of Xiaomi's 10th anniversary speech, Lei Jun publicly responded on Weibo: "We started to make Surge chips in 2014 and released the first generation in 2017. Later, we did encounter huge difficulties. But please rest assured, Mi fans, this plan is still going on." Lei Jun said that the plan is still going on, but he did not mention the specific progress and the time for the second generation to be launched. In other words, the new achievements of Xiaomi's self-developed chips will not be put to use in the short term.

Although Xiaomi will not see any new results in the short term, it has at least accumulated a lot of experience compared to OPPO and vivo. OPPO and vivo's chip self-development has only started in the past two years, and it may take longer to really put it into mass production.

In short, the reality is that it is difficult for the three major domestic manufacturers, Xiaomi, OPPO and vivo, to launch their own SOCs in the short term. If they want to take Huawei's place against Samsung and Apple, it will be a huge test for them in the competition of hard technology strength.

What’s worse is that self-developed chips are actually a dilemma for domestic manufacturers. If they don’t have the ability to develop their own SOCs, it will be difficult for them to become a truly global top giant to compete with Samsung and Apple; if they have the ability to develop their own SOCs, it’s hard to say whether they will be sanctioned like Huawei.

Currently, Xiaomi, OPPO and vivo are actively promoting self-developed SOC, which shows that they do not lack the courage to face challenges or even sanctions. The key is whether they can produce results as soon as possible.

The most dangerous year is also the year of rebirth

Huawei phones will have to bear the impact of the "supply cut" after September 15, until around October next year, when Hongmeng OS 2.0 will be applied to smartphones, which may open up a new situation for Huawei phones or bring some new opportunities. Huawei needs to find a way to survive the one-year period from October this year to October next year. After surviving this period, Huawei's consumer business may improve significantly when Hongmeng OS activates the AIoT ecosystem.

In this year, Xiaomi, OPPO and vivo need to withstand the pressure from Samsung and Apple, and maintain the global and domestic market share of Chinese manufacturers. At least they should not lose too much. After this year, their own self-developed SOC progress may also have substantial progress. By then, with the advancement of Huawei's self-developed Hongmeng system, the external pressure faced by domestic smartphone manufacturers as a whole may be greatly alleviated.

The key is that domestic manufacturers such as Huawei, Xiaomi, OPPO, and vivo need to redouble their efforts. If they can withstand the pressure within this year, the future development of domestic mobile phone manufacturers may no longer be restricted; but if they fail to withstand the pressure, it will cause huge losses to China's technology industry.