Analysts covering the sector opine Huawei will have to either reduce its margins or raise prices.
Huawei Technology Co’s upcoming launch of a solar-panel control device in the United States is expected to collide with the Trump administration’s new tariffs on Chinese electronics. As a result this is likely to undermine the product that analysts had seen as challenging peers on pricing.
Known for its telecommunication equipment and smartphones, Huawei has developed FusionHome – a new generation of low-cost solar inverters, which convert, manage and monitor energy produced by solar panels for home use.
It had planed to launch it in the U.S. before the end of summer, a year after its original target. Analysts and distributors expects it to be priced in the range of $100 to $200 in comparison to similar devices which cost $1,000 to $1,500 per household.
But a 25% tariff on Chinese electronics could overturn much of Huawei’s expected price advantage, said analysts and research firms.
If Huawei goes ahead with the U.S. launch of its device, it will have to either reduce its margins or raise prices; both scenarios will benefit rival producers including Enphase Energy and SolarEdge both of which are ramping up production outside China.
If the 25% tariff plan is implemented, it will take effect from August 23. Analysts covering the sector say it will impact Huawei’s new product.
“It certainly would eat into profits and is just a question on how aggressive Huawei wants to be,” said Jeffrey Osborne an analyst at Cowen & Co.
“A 25 percent tariff could eat up the margins of cost-competitive Chinese manufacturers and potentially change the player landscape of the U.S. solar inverter market,” said Iben Frimann-Dahl, an analyst from Rystad Energy.