Yesterday, Huawei launched the P40 series in China. Huawei Consumer Business Group CEO Richard Yu gave an online interview to the press earlier today. In that, he mentioned the company is barely making a profit from its high-end premium smartphones.
Huawei dethroned Apple to become the world’s second-largest smartphone brand in terms of shipments in 2019. But yet, it’s profit margin is less than that of the Cupertino-based tech giant. This is because the brand’s premium products feature high-end tech, which costs more but still the company sells the final product at a lesser price than its prime competitors.
Mr. Richard Yu said the camera components in the Huawei P40 series alone cost more than $100. He also revealed that the company has so far lost around $60 – $70 million dollars in selling the Mate Xs foldable smartphone, even though it is priced at 16,999 Yuan (~$2267). He further added that the company cannot make a profit unless the price of folding panels goes down. Till then, the retail price of the foldables will remain high.
Mr. Yu also revealed that Huawei’s investment in R&D will likely be the second-largest this year. He also added that some of the competitors merely spend a billion Yuan in R&D, however, his company is investing $20 billion.
He believes innovation and products should go hand in hand to retain customers and maintain sales. This is why Huawei has been focusing more on research and development. In 2019, the company invested about $18.5 billion in R&D (third-largest), which accounted for 15.3% of its total revenue of 467.3 billion Yuan with 34% YoY growth.
Huawei holds 85,000 patents worldwide, out of which 90% are invention patents. Last year, Huawei was the top patent applier in the European Union with a total count of 3,524.