One million sold in 15 days! Mate 20 5G demand taking off

August 2nd, Huawei began selling the 5G phone, online only. By August 15th, sales topped 1,000,000. On August 16th, lines formed around stores in several cities as sales began offline. Huawei will probably sell 7 million to 12 million 5G phones in China this year, replacing many of the lost sales in Europe.

ZTE and others are also selling phones, with Oppo committed to a price of US$580. The telcos have just begun offering phones in their shops. Two million signups in August are almost certain. China and Korea will likely each reach three million signups in September. After that, a wide gap will develop.

When Minister Miao told the Chinese telcos not to wait for October for 5G, the companies were not prepared. Over 50,000 radios were in place, but basics like price plans didn’t exist.

For now, all customers are on a free 100 gigabyte/month “experience” plan. The rumours are that prices will be 199 to 599 yuan, US$29 to $85 per month.

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$400-600 5G phones in 2019

Consumer CEO Yu Chengdong August 9th promised 5G midrange phones in 2019. He didn’t specify a price, but Oppo is selling a premium quality phone in China for US$580.

For US$290, I can buy an unlocked 4G Huawei P30 Lite (128GB, 4GB RAM) 6.15″ Display, and a triple camera.

The 5G version might cost Huawei $40 more to manufacture. The marketing department will set the price based on competition. Huawei would make money at $400.

He repeated Huawei’s expectation that the price will fall to less than $300 in 2019.

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Android-killer looks good

4-5,000 people on working to build Harmony, Huawei’s new operating system that works on all your devices and most Android mobile phones. There’s no test data available, but the specifications suggest it outperforms Android.

Harmony is running on the Honor Vision, a 55″ 4K connected TV that Huawei prefers to call a “smart screen.” The features, which look interesting are in the release below.

It can also run on most Android phones and will replace Android if the U.S. problems continue. It’s rumored to be testing widely on mobile phones in China. Ren has said he is ready if the U.S. forces his hand but would prefer to stick with Google.

Android works well with millions of apps. Huawei has put a billion dollars on the table for application developers. WeChat, TikTok, and tens of thousands of applications are already being ported for the Chinese market. It will take time for the Westerners to jump in.

About a third of mobile phones are in China, enough of a base to support an extraordinary ecosystem that will more than match most of the West. However, fear of problems has scared off many western buyers of mobile phones; sales will be down 20M to 50M this year if the boycott continues.

Harmony is almost certainly superior to Android because software has advanced enormously in the decade since Android came out.

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Huawei making RF radio frequency parts

“Huawei was using several RF parts from HiSilicon in the Mate 20 5G, which surprised us. We hadn’t seen that before.” Tech Insights examines thousands of devices each year to help the industry understand the latest advances.

The best, smallest radio frequency parts come from U.S. manufacturers like Qorvo & Skyworks. The first 5G phones support ~35 different frequency bands at high speed. Phones like the Galaxy 10 5G already have a problem on very hot days; the RF amplifiers need to be very power-efficient.

CEO Bob Bruggeworth of Qorvo estimates Huawei can now produce about 30% of the RF parts it needs.

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$400M in parts inventory, four month+ supply

Joe Madden, a well-informed analyst, writes,

During late 2018, Huawei started ramping up their purchasing of key semiconductors for their 5G base station platform. By May 2019 [Huawei] had inventory equivalent to 100,000 additional base stations using 64T64R MIMO. 

Yes, that’s a pile of 20 million amplifiers and millions of FPGAs. It’s a commitment of at least $400 million for “extra” inventory, in addition to their immediate production requirements.

FPGA’s (Field Programmable Gate Arrays) are designed to replace a circuit board with a single, easily configured chip. They are the right choice for the initial design and any product that’s not being sold in high volume. As product volume goes up, they are usually replaced with a dedicated chip, an “Application specific integrated circuit.”

Xilinx and Intel/Altera, both U.S. companies, dominate the top of the market.

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$1.4B new Shanghai centre for 30,000 researchers – with apartments

Looks idyllic

“Come work for Huawei and we’ll give an apartment!” New graduates have a terrible time finding housing, especially in Shanghai or Beijing. Ren has decided to compete for the best talent in the world. The apartments going up in the Shanghai Qingpu research park will lure some of the best to Huawei.

In China, the company is offering a handful of top PhDs as much as US$300,000. Huawei, Tencent, Alibaba, Baidu and the other Chinese giants are competing for graduates. It is hiring 15,000 this year.

Huawei has 15 large research centres around the world, backed by a huge R & D budget. It is the only company in communications that is investing heavily in basic science.

Why Shanghai when headquarters are in Shenzen? The company didn’t say, but I’d guess the nightlife is much livelier in Shanghai.

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300,000 5G Mate 20’s sold in first five days

Huawei is selling the high end 5G Mate 20 in China for RMB 6199 (US$880.) That’s only about $30 more than the 4G version. Who would want to buy a phone likely to be obsolete in a year or two to save $30?

The first delivery isn’t until August 16. Over 1 million will be sold by the end of August in China alone. The Mate 20 is a high end, 7.2″ phone that produces extraordinary pictures. (Specs below)

Huawei is using its own Kirin 980 + Balong 5000 chips for 5G and is also producing some of the radio frequency components. That brings down the difference in the bill of materials cost. I would guess Huawei only spends about $30 more in parts for the 5G.

This isn’t the cheapest 5G phone in China. Oppo is priced at RMB 4,000 yuan (US$580.) ZTE’s Axon10 Pro 5G version is priced at RMB 4,999 and is already delivering.

The only thing likely to hold back sales of the Mate 20 are the rumours that the P30 will have a breakthrough camera with a super-large sensor.

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U.S. war on Huawei may kill $2B Finisar merger

China’s State Administration for Market Regulation is holding up the takeover by II-VI of rival component maker Finisar. There are already too few companies making high-end components. A good argument can be made to block the deal on competition grounds.

Finisar makes some of the most advanced optical components. Huawei produces many of its own optics and can work around the U.S. blockade. It will continue buying components from the U.S. if permitted and wants to always have that option.

China is such a large part of the global market for electronics that it can effectively block any merger. The institutional investors that own most of Finisar will suffer a loss of several hundred million if the deal doesn’t go through.

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2,100,000 Huawei 5G base stations in 2019 & 2020

Ren Zhengfei says Huawei in 2019 will produce, “600,000 5G base stations, which will grow to around 1.5 million in 2020.” That’s an enormous number. The U.S. in total has under 400,000 bases.

I’ve been raising my estimates for 5G and I think I am still too low. China alone may do more than 200,000 radios in 2019 and 600,000-800,000 in 2020. China won’t stop until most of the two million cells are upgraded.

Korea will do 100,000 cells this year and cover 90%+ of the country. The country just passed 2 million 5G subscribers and is adding 500,000 per month. LG+ is using Huawei radios while SK & KT are using Samsung. Preliminary data is that all three networks are working pretty well. There is little performance difference apparent between the Huawei and the Samsung gear.

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HiSilicon producing 30%+ of Huawei’s radio frequency components

Mate 20 teardown

Radio frequency chips are the most important component Huawei needs in which American companies are far ahead. 5G phones have to support dozens of frequency bands at a very high speed and great precision.

Only the very best chip designers can deliver what’s needed in a very small module. It requires special materials and state of the art processing.

“Huawei is producing 30% of their RF components,” Qorvo CEO Robert Bruggeworth told investors.

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$17B in 2019 research, up >10%

Huawei is having a rough year, with sales only up 23% to US$58 billion. Phone sales were only 118 million units, up a mere 24% in a declining market. Net profit was only about $5 billion.

Chairman Liang Hua carefully did not mention the threat to Huawei’s survival more than five times. He did, however, show pictures of the bullet-riddled plane, symbolizing what Huawei has to face.

Huawei sales were less than Google ($75 billion) or Microsoft ($64 billion.) Apple, Amazon, and AT&T remain larger. The combined sales of Alibaba and Tencent (~$55 billion) or Facebook and Disney (~$59) are just about as large as Huawei’s revenue.

Kidding aside, Huawei is doing fine.

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Trump calls Intel, Micron, Google CEOs “lying hypocrites” (Opinion)

Intel and Micron busted Trump’s Huawei boycott by finding loopholes and resumed shipping to Huawei. Google very publicly called Trump’s demand they block Huawei from Google apps a major national security mistake.

Trump summoned to the White House Sundar Pichai of Google, Chuck Robbins, of Cisco, Robert Swan of Intel, Sanjay Mehrotra of Micron, Stephen Milligan of Western Digital Corporation, Steven Mollenkopf of Qualcomm, and Hock Tan of Broadcom.

“The CEOs expressed strong support of the president’s policies, including national security restrictions on United States telecom equipment purchases and sales to Huawei,” the White House said.

Washington is a city of lies, so perhaps that is what they told the President. Alternately, the CEOs might have been lying when (most of) them promised support for China.

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