Xiaomi killers and impact on the supply chain
Deutsche Bank
Markets Research
Asia
Taiwan
Technology
Hardware & Equipment
Industry
Greater China
Smartphone
Date
28 May 2014
Industry Update
Birdy Lu, CFA
Xiaomi, Xiaomi killers and impact on the supply chain
Research Analyst
(+886) 2 2192 2822 birdy.lu@db.com Xiaomi, Xiaomi killers and beneficiaries
The huge success of Xiaomi smartphones (especially Hongmi Note) has led all tier-one Chinese smartphone vendors to launch similar “high-spec mid-price” devices that aim to be Xiaomi killers in the market. These devices have been selling strongly, and cannibalizing global OEMs’ mid/low-end smartphones in
China. In our coverage universe, we believe Largan, FIH Mobile, AAC
Acoustics, Mediatek (covered by Jessica Chang) and TSMC (covered by
Michael Chou) are key beneficiaries of this trend.
LARGAN Precision
(3008.TW),TWD2,015.00
AAC Technologies (2018.HK),HKD43.20
FIH Mobile Limited (2038.HK),HKD4.26
HTC (2498.TW),TWD163.00
How do these phones achieve such good cost-performance ratio?
These phones generally feature a 5”+ display, an 8-core AP, 13MP/5MP front/rear cameras, and a high-capacity battery (see Figure 1), but are retailed at ~RMB1000 (~USD160). At first glance, their specs are at par with global brands’ flagship devices, which are often retailed at USD600 or higher.
However, a close look at their cost structure (see Figure 2) suggests that they use downgraded APs, TFT displays, memory, camera modules, and mechanical components in a clever way that general consumers might not perceive as a downgrade. For example, they use cheaper Mediatek 8-core AP to replace the pricy Qualcomm S800 4-core AP (used by global brands). Most consumers will intuitively prefer the 8-core AP to the 4-core AP but won’t notice that the overall performance of the Qualcomm AP is better. The adoption of Mediatek’s total solution also helps to save peripheral semiconductor costs (baseband, WiFi/BT/GPS, power management,
Markets Research
Asia
Taiwan
Technology
Hardware & Equipment
Industry
Greater China
Smartphone
Date
28 May 2014
Industry Update
Birdy Lu, CFA
Xiaomi, Xiaomi killers and impact on the supply chain
Research Analyst
(+886) 2 2192 2822 birdy.lu@db.com Xiaomi, Xiaomi killers and beneficiaries
The huge success of Xiaomi smartphones (especially Hongmi Note) has led all tier-one Chinese smartphone vendors to launch similar “high-spec mid-price” devices that aim to be Xiaomi killers in the market. These devices have been selling strongly, and cannibalizing global OEMs’ mid/low-end smartphones in
China. In our coverage universe, we believe Largan, FIH Mobile, AAC
Acoustics, Mediatek (covered by Jessica Chang) and TSMC (covered by
Michael Chou) are key beneficiaries of this trend.
LARGAN Precision
(3008.TW),TWD2,015.00
AAC Technologies (2018.HK),HKD43.20
FIH Mobile Limited (2038.HK),HKD4.26
HTC (2498.TW),TWD163.00
How do these phones achieve such good cost-performance ratio?
These phones generally feature a 5”+ display, an 8-core AP, 13MP/5MP front/rear cameras, and a high-capacity battery (see Figure 1), but are retailed at ~RMB1000 (~USD160). At first glance, their specs are at par with global brands’ flagship devices, which are often retailed at USD600 or higher.
However, a close look at their cost structure (see Figure 2) suggests that they use downgraded APs, TFT displays, memory, camera modules, and mechanical components in a clever way that general consumers might not perceive as a downgrade. For example, they use cheaper Mediatek 8-core AP to replace the pricy Qualcomm S800 4-core AP (used by global brands). Most consumers will intuitively prefer the 8-core AP to the 4-core AP but won’t notice that the overall performance of the Qualcomm AP is better. The adoption of Mediatek’s total solution also helps to save peripheral semiconductor costs (baseband, WiFi/BT/GPS, power management,