Strong sales of Huawei Mate 60 in China could impact iPhone, BofA says

Kevin Frayer

Late last month, Chinese tech company Huawei surprisingly announced a new flagship smartphone, the Mate 60 and Mate Pro, which incorporates an in-house chip that looks to perform at 5G speeds.

While the new phone and new chip may be seen as blow to the Biden Administration's efforts to curb the Chinese semiconductor industry, it could also have an impact on Apple (NASDAQ:AAPL) if it's a success.

Bank of America analyst Wamsi Mohan, who has a neutral rating and $210 price target on Apple (AAPL), said the new Mate 60 could pose an opportunity for Huawei to regain market share if it's able to supply and scale the homegrown Kirin 9000S chip.

"If Huawei has the capability to supply and scale its home-grown Kirin 9000S, we see the Mate series phone as an opportunity for Huawei to increase its shipments and regain its market share, potentially posing downside risk to iPhone sales, especially in the Asia Pacific," Mohan wrote in an investor note.

Mohan estimated that for every 1M iPhones sold, Apple (AAPL) sees a roughly 1 cent per share impact. If Huawei were to gain back the 10M units it lost to Apple in China, that could impact earnings by roughly 11 cents per share in fiscal 2024.

Since the sanctions began, Huawei has lost roughly 30M units in China to Apple, which Mohan said could result in an impact of 34 cents per share to the U.S. tech giant.

More on Apple

• Seeking Alpha’s Quant Rating on Apple
• Apple: Incredible Recovery Lifting Sentiments Ahead Of iPhone 15 Launch
• Apple: Tim Cook's Plan To Revive Growth Is Here
• Apple partner Foxconn says August revenue drops 8%, forecasts stronger Q3

Comments

[highbridge]

Okay, Biden Adminstration, if Huawei has 5G chips anyway now. Can we please sell Qualcomm advanced 5G Chips to Huawei so Huawei can sell the Mate60 phone back to US. Lol.

[Winnertakesall]

At the rate they appear to be catching up I think Apple could be in huge trouble. Huawei isn't a public company either and has the full backing of the CCP. It certainly will be interesting going forward.... what happens to Apples 43% margin when the Chinese are willing to take it to zero.

[Amos Burton]

@Winnertakesall Samsung has had 0 margin for a decade.

[DoubleClick]

@Winnertakesall To be precise, it has the full backing of Chinese people.

[Just the Millionaire next door]

@Winnertakesall Been selling cheap phones for a long time. where have you been?

[Pmg1959]

Phone has AI capabilities.

Game, set, match.

Sell $AAPL. Quickly.

[MoneyPig]

Rumor out of Taiwan is the Chinese 5G chip can also connect to satellite. And Chinese have, by a mile, the best telecom network on the planet. I was a long time shareholder in CHL.

China, just like Taiwan, can easily put ten or more engineers to task at less than the cost of one in the USA. This is how Taiwan leapfrogged the USA and TSM and NVDA bested everyone else.

It gets more interesting when one compares strategy. See, over at APPL the strategy is grow service revenue, while over at Huawei the strategy may be best technology. Simply becuase they got ten engineers to every one engineer advantage.

Going to get interesting. Like Taiwan, China is hyper-competitive.

[MoneyPig]

@MoneyPig

This strategy of "better tech" can upend all US Tech. Even MSFT is all about getting a monthly payment. Their software is okay, at best. I stopped using excel. Just not worth the hassle, always updating, so many versions, and so on.

[MoneyPig]

Good for China. :) we are witness to the end of colonialism.

[0xfc]

Hm. SA is just relaying more Chinese propaganda. It is just a slight revision of the Taiwan made 9000 series. It reports as the 9000s. It is probably a big batch of old chips made in Taiwan before the blocks that they scraped the made in taiwan off of it and put CN.

Enjoy the year 2020-2021 performance on your high end new phone.

Remember this is the same country that said they made their own processor and it just used a laser etching machine to remove Intel and put CN.

[Tonygect Gee]

@0xfc Techinsights already confirmed that the chip is indeed made by SMIC，the transistor structure is totally different from that of TSMC.
Techinsights is a Canadian company，not Chinese propaganda.

[BboyMac]

@0xfc if the projection is 120 million units in one year, it can’t be using old batch chips.

[newbienik]

@0xfc angry white boi post alert

[Jacobin777]

My observations in both India and Pakistan is that unlike the USofA, Android is much stronger market than Apple.

There are A LOT of Android phones available in both countries.

I haven't been to China in a while however I wouldn't be surprised if China is a lot like that as well.

My point is that Apple has a lot of (cheap) competition in those 3 countries alone.

[Just the Millionaire next door]

@Jacobin777 They are selling an Iphone SE in India for a cheap price.

[Jacobin777]

@Just the Millionaire next door Not saying millions aren't using one (obviously they are). However no one I saw used an Iphone.

[Just the Millionaire next door]

@Jacobin777 I know many Indian people here. Most use Iphone.

[Blowback2]

'If Huawei were to gain back the 10M units it lost to Apple in China, ...' from the most loyal customer base on the planet? Good Luck....

[FaultyR0M]

@Blowback2 unless trade war heats up. Already China banned iPhones for all Gov employees. Could extend the ban to all public sector employees or put retaliatory tariffs. Who knows.

[Blowback2]

Got to put Apple in the title. Fuel for clicks....

[Doan_2020]

Good luck China, you’ll need it.

[demuxer]

@Doan_2020 I don't think China believe luck at all in this regard. By the way, US can not make 7nm chip itself without Taiwan and Korea.

[Doan_2020]

@demuxer I'm just saying there are many things going against China at this time: high youth unemployment, real estate crises, etc.

[demuxer]

@Doan_2020 yeah, it's always like that, regional banking crises, commercial real estate crises, political crises, etc, etc, usually I don't spend too much time on the cable news, which is full of narratives (defined by very few people) without much facts.

[allroundr]

Huawei will eventually buy or spy the tech they want. The trick is to keep tech moving. By the time China gets anything into production/fab, it’ll be a bygone.

[Niki Naza]

@allroundr
"By the time China gets anything into production/fab, it’ll be a bygone."

Weird statement, seeing how the West spent the last 30-40years putting *everything* into Chinese production facilities...

[nate311]

@Niki Naza west was mesmerized by cheap chinese labor and kept its eyes closed to IP theft...till ignoring was no longer feasible. for a yr businesses can't get out of china fast enough! youth unemployment gonna be difficult to lower with cos running fr xi's economic policies.

[michae1601]

This partial report is misleading. A new phone doesn't automatically eat into apple's sales. It is not a seamless move as apple's ecosystem is sticky. Most users switch phone makers on the Android side. Not sure if mate60 is android anymore and that would make it even harder to switch.

Also this is a last ditch effort chip with its own OS. its not a phone with latest technology. So use it as a buying opportunity for aapl

[nate311]

@michae1601 apple's ecosystem makes iphone, as buffett says, not just sticky but PERMANENT!

[Rob Tanner]

FYI this has literally nothing to do with the US trying to restrict Chinese chip access. That’s about super cutting edge AI chips, not phone SOC’s.

[SFIndianInvestor]

@Rob Tanner No, this is not about AI chips. This is about 5G chip which Huawei didn't have access to until now due to US sanctions.

[acpennington]

@Rob Tanner It definitely has to do with it, and it has nothing to do with AI. Huawei is on a US blacklist due to their ties to the Chinese military. The only company authorized to export chips to Huawei is Qualcomm, and that's only 4G chips. If Huawei wants 5G chips, they will not get them from the US.

[Rob Tanner]

@acpennington oh right yes, of course.