Huawei executive director Richard Yu addressed the impact of rising memory component costs on smartphone production. According to the company, the price surge has added over $200 to the production cost of each device. Huawei notes that its higher memory configurations compared to industry peers have exacerbated this financial burden.
The company has been absorbing these costs to avoid passing them on to consumers, but this strategy has led to a sharp decline in overall profit margins. Yu stated that Huawei will now have to increase smartphone prices to ensure the business remains sustainable and viable for the future.
The rising costs are expected to put significant pressure on the low-end smartphone market, likely forcing manufacturers to pivot toward mid-range and high-end segments. Huawei intends to maintain its focus on the premium market, where it sees its competitive strength.
Huawei is also evaluating its distribution strategy in developed markets, particularly in Europe. The company is considering a return to carrier-based sales channels, which are the primary method for smartphone distribution in those regions, to increase its market presence.
