Huawei Poses Biggest Challenge to Qualcomm. Apple and Samsung Add Additional Forces
The mobile technology landscape is undergoing significant changes, with Huawei’s announcement to fully adopt self-developed Kirin processors in its smartphones starting in 2024. Renowned analyst Ming-Chi Kuo sheds light on the potential consequences of this move for Qualcomm’s Snapdragon chipset and the broader smartphone market.
- Huawei’s Transition:
Huawei, one of the world’s largest smartphone manufacturers, has been a significant customer for Qualcomm, purchasing 23–25 million and 40–42 million mobile phone SoCs (System-on-Chip) in 2022 and 2023, respectively. However, a seismic shift is on the horizon as Huawei plans to replace Qualcomm’s offerings with its in-house Kirin processors.
- Qualcomm’s Looming Challenge:
Kuo predicts that Qualcomm will not only lose Huawei’s orders entirely from 2024 onward but will also face the risk of diminishing shipments to other Chinese smartphone brands due to fierce competition from Huawei. This potential decline in Qualcomm’s SoC shipments to Chinese smartphone brands in 2024 could be substantial, estimated at 50–60 million units lower than in 2023, and it is anticipated to continue declining in the years to come.
- The Impending Price War:
In response to the threat of diminishing market share in China, Kuo’s research suggests that Qualcomm may resort to initiating a price war as early as the fourth quarter of 2023. This strategic move, while intended to maintain market share, could adversely affect Qualcomm’s profitability.
- Other Market Challenges:
Apart from Huawei’s shift, Qualcomm faces additional challenges. The market share of Samsung’s Exynos 2400 in Samsung mobile phones is gaining ground faster than expected, posing a further threat to Qualcomm’s dominance. Additionally, Apple’s plan to use its modem chip starting in 2025 could potentially reduce Qualcomm’s presence in one of its major categories.
Ming-Chi Kuo’s analysis paints a complex picture of the future for Qualcomm in the wake of Huawei’s decision to transition to Kirin chipsets. The loss of Huawei as a major customer, the potential price war, and competition from other chipset manufacturers are significant challenges that Qualcomm must navigate. As the mobile technology landscape continues to evolve, Qualcomm will need to innovate and adapt to stay competitive in this ever-changing market.