Chinese tech companies chip away at foreign rivals
One of the positive outcomes of the government's decision to support local innovation is that many Chinese firms have announced plans to make their own chips and software products for mobile devices.
Home-grown firms seek to develop their own mobile processors and operating systems
Chinese firms, it seems, are intent on gaining market share in these areas where they have been lagging for long.
The development follows Chinese tech majors' taking of nearly 80 percent share of the country's smartphone market.
Telecom equipment maker Huawei Technologies Co Ltd, which is also China's biggest smartphone vendor by shipments, is the staunchest advocate of made-in-China chips.
Huawei has already used a home-made processor, the Kirin 950, in its latest flagship device Mate 8, a 3,000-yuan smartphone which is trying to take on the iPhone 6S and Samsung Electronics Co's Galaxy series.
In November, Kirin 950 was one of the hottest topics at the Mate 8 launch. "The processing power of Mate 8 will make other vendors' devices look weak," said Yu Chengdong, head of Huawei's consumer division.
Kirin 950 was produced by HiSilicon Technologies Co Ltd, a chipmaking subsidiary of Huawei. The long-awaited chip received the market's thumbs-up because of its processing speed and power-efficient design.
But Huawei is looking for more than positive reviews. The company hopes the Kirin series will become a top contender in the mobile chip market, challenging Qualcomm Inc of the United States and MediaTek Inc of Taiwan, which dominate the market now.
Qualcomm has been the biggest high-end mobile chip supplier to Chinese handset makers, including Xiaomi Corp and Lenovo Group Ltd. MediaTek used to focus on the lower-end market, but it, too, has begun producing chipsets for high-end devices.
The two giants accounted for about 60 percent share of Android devices in 2015, according to AnTuTu, a smartphone performance review company.
HiSilicon, whose biggest customer was its parent Huawei, had a 7.73 percent share of the chip market in 2015, said AnTuTu, adding the corresponding figure for 2014 was less than 3 percent.
Besides Qualcomm and MediaTek, two other foreign chip-makers are prominent in China: Samsung and Intel.
The rapid growth in HiSilicon's market share was because of the high level of shipments of Huawei's premium devices, AnTuTu said in a report.
In the July-September quarter, Huawei emerged the biggest smartphone vendor in China overtaking Xiaomi, according to research firm Canalys. The Shenzhen, Guangdong-based Huawei registered 81-percent year-on-year growth in shipments, while Xiaomi's shipments shrank, Canalys said.
Information security concerns will likely give Chinese-made chips a bigger room in 2016.
Which is why, Spreadtrum Communications Inc, a chip-maker under the State-owned phones have the power (to hold personal data, shape opinions and publish views), it is not safe (to have foreign-made chips in them). That is why, we have to develop our own chipsets."
The Chinese company has plans to spend 300 billion yuan ($46.4 billion) in the next five years to become the world's third-largest chipmaker.
Ye Tianchun, director of the Institute of Microelectronics, which is under the aegis of the Chinese Academy of Sciences, said Chinese chip-making industry is growing its presence in the global market fast as China has announced plans to boost technology upgradation.
"Chip-making is a critical technology for many areas, including smartphones. China is set to grow a strong chip sector, so we don't need to beg other countries for key chipsets," Ye said.
Besides chips, device operating systems are getting Chinese technology firms' attention.
For instance, ZTE Corp said in late 2015 it is planning to develop its own operating system based on Linux. Sources familiar with the company's smartphone project said the Chinese company is also working on a system-on-a-chip processor to fight off overseas providers.
ZTE is pinning hopes on government procurement deals. Some of its devices are already used by the government as gifts for dignitaries. Alibaba Group Holding Ltd, an e-commerce giant, is hopeful that YunOS, its cloud-based mobile operating system, will receive government deals.
YunOS has been already adopted by a number of local firms such as Meizu Telecom Equipment Co Ltd and Ningbo Bird Co Ltd. It has been the only China-made mobile operating system to have successfully cleared a government quality and security test.
In China, only software products that receive government approval can be sold to government bodies and State-owned enterprises.
Huawei moves into top three globally
Huawei Technologies Co. shipped more than 100 million smartphones this year as a drive to attract higher-end customers helped defy an industry slowdown that hit rival Chinese vendors.
China's largest mobile brand boosted shipments by 33 percent and moved into the top three globally, the Shenzhen-based company said in a statement on its website. Samsung Electronics Co and Apple Inc are the world's two biggest producers.
Huawei, which debuted its first Android device in 2009 to complement its main business of making networking equipment, is pushing into markets from the United States to Europe to take on Apple and Samsung. Expanding beyond China, where slowing market growth has hurt Xiaomi Corp and Lenovo Group Ltd, is part of a goal to sell 60 percent of smartphones overseas and generate about $16 billion of revenue from phones in 2015.
The company bets on "the trend among consumers to upgrade to higher-end devices from entry-level smartphones," said John Butler and Matthew Kanterman, analysts with Bloomberg Intelligence. "Huawei is likely to maintain this tack in 2016, as it invests in expanding its mid-range and high-end smartphone product suite."
A third of the smartphones shipped by Huawei in the third quarter cost more than 2,000 yuan ($309) each, the company said.
Growth at Huawei, founded by former Chinese army engineer Ren Zhengfei, comes as IDC forecasts Chinese market growth will slow to the low single-digits in 2015. That has rippled through a domestic industry crowded with brands such as Gionee, OnePlus, Oppo and Meizu, backed by Alibaba Group Holding Ltd.
Xiaomi is in danger of missing its target of selling 80 million smartphones in 2015, people with knowledge of its production plans said earlier last year. The startup founded by Lei Jun saw domestic shipments drop in the third quarter in their first-ever decline, according to researchers at Canalys and IHS. Through the first nine months of 2015, Xiaomi moved about 53 million smartphones.
Lenovo meanwhile is struggling to turn around the Motorola brand it acquired in 2014. The company is taking $900 million of charges to cut costs and restructure the division.
Still, the Chinese market has proven volatile in past years. Xiaomi once led local vendors through viral marketing and crafting a social-media experience for its users. It's now ranked fifth globally, behind Lenovo.
Huawei accounted for 7.5 percent of all phones shipped globally in the third quarter of 2015, behind Apple's 13.5 percent and Samsung's leading 24 percent, according to IDC.
"We hope to be able to sustain our growth in 2016," He Gang, Huawei's smartphone products president, said in the statement.
Chinese firms, it seems, are intent on gaining market share in these areas where they have been lagging for long.
The development follows Chinese tech majors' taking of nearly 80 percent share of the country's smartphone market.
Telecom equipment maker Huawei Technologies Co Ltd, which is also China's biggest smartphone vendor by shipments, is the staunchest advocate of made-in-China chips.
Huawei has already used a home-made processor, the Kirin 950, in its latest flagship device Mate 8, a 3,000-yuan smartphone which is trying to take on the iPhone 6S and Samsung Electronics Co's Galaxy series.
In November, Kirin 950 was one of the hottest topics at the Mate 8 launch. "The processing power of Mate 8 will make other vendors' devices look weak," said Yu Chengdong, head of Huawei's consumer division.
Kirin 950 was produced by HiSilicon Technologies Co Ltd, a chipmaking subsidiary of Huawei. The long-awaited chip received the market's thumbs-up because of its processing speed and power-efficient design.
But Huawei is looking for more than positive reviews. The company hopes the Kirin series will become a top contender in the mobile chip market, challenging Qualcomm Inc of the United States and MediaTek Inc of Taiwan, which dominate the market now.
Qualcomm has been the biggest high-end mobile chip supplier to Chinese handset makers, including Xiaomi Corp and Lenovo Group Ltd. MediaTek used to focus on the lower-end market, but it, too, has begun producing chipsets for high-end devices.
The two giants accounted for about 60 percent share of Android devices in 2015, according to AnTuTu, a smartphone performance review company.
HiSilicon, whose biggest customer was its parent Huawei, had a 7.73 percent share of the chip market in 2015, said AnTuTu, adding the corresponding figure for 2014 was less than 3 percent.
Besides Qualcomm and MediaTek, two other foreign chip-makers are prominent in China: Samsung and Intel.
The rapid growth in HiSilicon's market share was because of the high level of shipments of Huawei's premium devices, AnTuTu said in a report.
In the July-September quarter, Huawei emerged the biggest smartphone vendor in China overtaking Xiaomi, according to research firm Canalys. The Shenzhen, Guangdong-based Huawei registered 81-percent year-on-year growth in shipments, while Xiaomi's shipments shrank, Canalys said.
Information security concerns will likely give Chinese-made chips a bigger room in 2016.
Which is why, Spreadtrum Communications Inc, a chip-maker under the State-owned phones have the power (to hold personal data, shape opinions and publish views), it is not safe (to have foreign-made chips in them). That is why, we have to develop our own chipsets."
The Chinese company has plans to spend 300 billion yuan ($46.4 billion) in the next five years to become the world's third-largest chipmaker.
Ye Tianchun, director of the Institute of Microelectronics, which is under the aegis of the Chinese Academy of Sciences, said Chinese chip-making industry is growing its presence in the global market fast as China has announced plans to boost technology upgradation.
"Chip-making is a critical technology for many areas, including smartphones. China is set to grow a strong chip sector, so we don't need to beg other countries for key chipsets," Ye said.
Besides chips, device operating systems are getting Chinese technology firms' attention.
For instance, ZTE Corp said in late 2015 it is planning to develop its own operating system based on Linux. Sources familiar with the company's smartphone project said the Chinese company is also working on a system-on-a-chip processor to fight off overseas providers.
ZTE is pinning hopes on government procurement deals. Some of its devices are already used by the government as gifts for dignitaries. Alibaba Group Holding Ltd, an e-commerce giant, is hopeful that YunOS, its cloud-based mobile operating system, will receive government deals.
YunOS has been already adopted by a number of local firms such as Meizu Telecom Equipment Co Ltd and Ningbo Bird Co Ltd. It has been the only China-made mobile operating system to have successfully cleared a government quality and security test.
In China, only software products that receive government approval can be sold to government bodies and State-owned enterprises.
Huawei moves into top three globally
Huawei Technologies Co. shipped more than 100 million smartphones this year as a drive to attract higher-end customers helped defy an industry slowdown that hit rival Chinese vendors.
China's largest mobile brand boosted shipments by 33 percent and moved into the top three globally, the Shenzhen-based company said in a statement on its website. Samsung Electronics Co and Apple Inc are the world's two biggest producers.
Huawei, which debuted its first Android device in 2009 to complement its main business of making networking equipment, is pushing into markets from the United States to Europe to take on Apple and Samsung. Expanding beyond China, where slowing market growth has hurt Xiaomi Corp and Lenovo Group Ltd, is part of a goal to sell 60 percent of smartphones overseas and generate about $16 billion of revenue from phones in 2015.
The company bets on "the trend among consumers to upgrade to higher-end devices from entry-level smartphones," said John Butler and Matthew Kanterman, analysts with Bloomberg Intelligence. "Huawei is likely to maintain this tack in 2016, as it invests in expanding its mid-range and high-end smartphone product suite."
A third of the smartphones shipped by Huawei in the third quarter cost more than 2,000 yuan ($309) each, the company said.
Growth at Huawei, founded by former Chinese army engineer Ren Zhengfei, comes as IDC forecasts Chinese market growth will slow to the low single-digits in 2015. That has rippled through a domestic industry crowded with brands such as Gionee, OnePlus, Oppo and Meizu, backed by Alibaba Group Holding Ltd.
Xiaomi is in danger of missing its target of selling 80 million smartphones in 2015, people with knowledge of its production plans said earlier last year. The startup founded by Lei Jun saw domestic shipments drop in the third quarter in their first-ever decline, according to researchers at Canalys and IHS. Through the first nine months of 2015, Xiaomi moved about 53 million smartphones.
Lenovo meanwhile is struggling to turn around the Motorola brand it acquired in 2014. The company is taking $900 million of charges to cut costs and restructure the division.
Still, the Chinese market has proven volatile in past years. Xiaomi once led local vendors through viral marketing and crafting a social-media experience for its users. It's now ranked fifth globally, behind Lenovo.
Huawei accounted for 7.5 percent of all phones shipped globally in the third quarter of 2015, behind Apple's 13.5 percent and Samsung's leading 24 percent, according to IDC.
"We hope to be able to sustain our growth in 2016," He Gang, Huawei's smartphone products president, said in the statement.
