It is not on the high end that Huawei has the most margin, we suspected … the thing is true. By the admission of Yu Chengdong (director of the Huawei customer business unit), the firm would even sell the new version of its foldable smartphone, the Mate Xs, at a loss.
Huawei receives no profit from the sale of its recent Mate Xs, yet sold from 2,500 euros in France. Worse, the marketing of this new foldable smartphone would have already cost between 60 and 70 million dollars to the Chinese group, which is currently selling it at a loss. This is symptomatic of a whole new design and extremely expensive technology to produce for Huawei, which plans to make no profit from the device, at least until its production costs have not dropped.
Yu Chengdong, one of Huawei’s executives, said the price of foldable smartphones could take up to two years to return to the level of average prices seen on high-end smartphones “Traditional”. We are warned.
Huawei invests heavily in R&D to reduce production costs
Under these conditions, Huawei’s goal is clear: to find a way to reduce production costs as much as possible without impacting the final quality of the device. To do this, the firm this year has bet on heavy investment in research and development, while increasing its operating scale for its foldable smartphones. Two measures that should ultimately bear fruit both for Huawei (which will finally be able to create a margin and therefore profits), and for the end consumer (foldable mobiles will finally be able to cost less to buy).
Another lever for Huawei is to sell foldable screens to third-party manufacturers in order to increase its revenues and make the production of its own foldable smartphones profitable. This is notably the technique adopted by his Chinese compatriot Royole, who sells units of its second generation of foldable screens at ZTE.
Mate Xs in high demand in China
The fact remains that despite sales at a loss, Huawei continues to market its Mate Xs and to envisage a future for its range of foldable smartphones. Why ? Because the device is very successful in China, reports Android Headlines, especially through flash sales organized in the country.
Huawei would therefore seek to take over the sales at a loss of its device to capitalize on the enthusiasm it arouses. A policy that could pay off in the medium term – especially in China where the firm concentrated again in 2019 following the American sanctions. Huawei can also afford to sell its technology showcase at a loss as long as it rakes in profits thanks to other smartphones … and that is the case. In 2019, the “ consume »Of the group saw its revenues increase by 34% compared to 2018.