Prices of Huawei phones rising every hour on fears on shortages

Chinese consumers are rushing to purchase Huawei’s smartphone featuring its high-end Kirin chips, fearing that the company’s production of its premium handsets will face punitive curbs by U.S. trade action.

According to Huaqiangbei, smartphone vendors in China’s southern city of Shenzhen, are seeing a steady rise in the prices of used and new Huawei phones by around 400 to 500 yuan, on average.

However, consumers are worried over the supply of components for newer handsets, said a vendor.

“The Huawei phones are getting expensive but that’s supply and demand,” said the vendor who gave her name as Xiao. “If people like the brand, they’ll pay more – and who knows how good the chips they’ll have in the future will be?”

Last year, the U.S. government had moved to prevent U.S. companies from doing business with Huawei, citing inherent security risks since Huawei is ultimately answerable to the Chinese government.

Last month, Washing further tightened restrictions of chips to Huawei, prompting Taiwan Semiconductor Manufacturing Co Ltd (TSMC) to stop shipping wafers to Huawei.

According to Richard Yu, Huawei’s head of its consumer business, the company will stop producing Kirin chips on September 15 because of U.S. trade action.

Huawei is depending on its chipmaking unit HiSilicon from key technologies, and the latter depends on software produced by Cadence Design Systems Inc or Synopsys Inc, both of which are U.S. companies, to design its chips; HiSilicon outsources production to TSMC, which also uses U.S.-made equipment.

Wholesale traders at Shenzhen had been busy meeting extra demand for online sales, with prices of high-end phones surging every few hours. There is lots of ambiguity as to how much supply is available with distributors.

Incidentally, Huawei does not disclose inventory information. According to Will Wong, an analyst at IDC, the company is likely to have a inventory which will through the first half of 2021.

“One option for them to have Kirin chips last longer is to ship less for the rest of the year,” said Wong.

($1 = 6.7722 Chinese yuan renminbi)

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