Huawei Phones Pose New China Challenge To Apple.

"Apple is facing a new competitive threat in China after the country ordered some officials not to use iPhones: Hardware giant Huawei Technologies is selling a smartphone capable of ultrafast data connectivity.

The new Huawei phone, coupled with the ban, has the potential to make a significant dent in Apple's sales and once again underscores the risks global companies face as geopolitical tensions between the U.S. and China spill over into many industries.

Apple is particularly vulnerable, as most of its products are assembled in China. Chief Executive Tim Cook for years has engaged in a delicate dance to keep his company from being ensnared as the two countries have disagreed over trade and technology.

The U.S. tech company's shares fell 2.9% Thursday, adding to the stock's declines since The Wall Street Journal reported Wednesday that China ordered officials at central government agencies not to use Apple's iPhones or bring them into the office.

The iPhone maker has dominated China's high-end phone market in recent years after tough U.S. sanctions limited chip supplies, and Huawei earlier abandoned plans to make phones with 5G, a cellular standard that enables far speedier connections. Millions of smartphone users around the world have upgraded their devices as so-called fifth-generation cellular technology held the promise of faster and better connections and other new potential uses.

Now Huawei is fighting back, releasing a new phone in China with 5G-like speeds and capabilities. The initial batch of the phone -- the Mate 60 Pro, priced at $960 for presale -- sold out within hours. Other buyers have placed orders for delivery later. The early fervor suggests Huawei could reclaim buyers it lost in China to Apple, which is due to unveil its latest iPhone next week.

"The government ban and the new Huawei phone will be material events for the iPhone," said Martin Yang, an analyst at investment firm Oppenheimer. "The two combined will drive more Android users to upgrade to the Huawei, or iPhone users going back to Huawei."

Yang said Apple could lose 10 million iPhone shipments in 2024 because of the new Huawei phone. The company shipped 224.7 million iPhones in 2022, according to Counterpoint Research, so that figure would amount to about 4.5% of total iPhone shipments.

Apple is expected to release the iPhone 15 next week, and the company in recent years has relied on high-end device sales for outsize growth and profitability.

It remained unclear exactly what prompted China to restrict iPhone use, but some analysts suggested that a similar action in Russia might have helped prompt Beijing.

While the order hasn't been publicly announced, it could pose reputational risks to Apple in China. Individual users beyond central government employees, such as local government officials or those who work with the government in China, could be prompted to avoid Apple products, said Xiaomeng Lu, a director at risk consulting firm Eurasia Group focusing on geopolitics and technology.

While Huawei isn't calling its new device a 5G phone, tests by Chinese consumers and domestic testing agencies show it could reach a maximum download speed of 500 to 800 megabits a second. Such a speed would allow consumers to download a movie in high definition within a minute and far surpasses the speed limit of about 300 megabits a second for 4G networks.

Huawei has also highlighted features such as satellite communications that allow users to connect in areas without traditional mobile coverage, a capability that is supported for calls -- unlike Apple, which can only support messaging. The product's boxes say "satellite mobile terminal," instead of "digital mobile device," the phrase that was used for earlier phone products.

Industry watchers are debating how the Chinese telecom giant pulled off such a technological feat despite facing sanctions that restrict its access to U.S. chips and related technologies. The privately held Chinese company has stayed silent on the biggest source of conjecture: the phone's core processor and other key mobile chips.

A state-owned newspaper touted the coming phone as the company's successful return to the 5G smartphone market." [1]

It is difficult to get rid of the impression that states, using the need for security as a pretext, protect their companies - the US protects Apple, and China protects Huawei.

1. Huawei Phones Pose New China Challenge To Apple. Yang, Jie. 
Wall Street Journal, Eastern edition; New York, N.Y.. 08 Sep 2023: B.1.