Honor’s annual cumulative production of its foldable smartphones surpassed 1 million units on November 23

Omdia view

Summary

Honor’s cumulative foldable smartphone production in 2023 exceeded 1 million units on November 23, positioning itself as a formidable player in the large-scale manufacturing of high-end smartphone products. Honor Magic V2, which is popular in the market, helped Honor rank first in China’s foldable smartphone market in 3Q23. Chinese brands have taken the lead in crucial design indicators of foldable smartphones in 2H23. Owing to the gradually accumulating advantages of the foldable smartphone supply chain, Chinese companies are gradually leading their peers in the design of lightweight foldable smartphones. The development of the Chinese foldable smartphone market will also promote China’s transition from traditional manufacturing to high-end manufacturing.

The high-end manufacturing capacity of Honor showed remarkable improvement

Honor’s cumulative foldable smartphone production in 2023 exceeded 1 million units on November 23. A whopping 80% of this production stems from Magic V2, a new foldable product released in the middle of July. This cutting-edge device boasts ultimate hardware parameters, breaking and maintaining the record for thinness and lightness in foldable smartphones during 2H23. Following its market release, the Magic V2 garnered significant acceptance, prompting Honor to swiftly increase production in response to heightened demand. Compared with its predecessor, the planned production of Honor Magic V2 has multiplied several times, making it the largest planned production in Honor’s history of foldable devices. This is also the fastest-growing foldable production in China, surpassing 800,000 units in just over four months. Remarkably, it achieved this milestone in just over Four months, establishing Honor as the fastest brand to achieve such a significant production feat.

Foldable smartphones, positioned as high-end products, feature high manufacturing complexities and difficulties owing to their structural specificity. Given these challenges, mainstream brands rely on in-house production facilities to ensure high quality and manufacturing efficiency, with Google being one of the exceptions. The Honor Intelligent Manufacturing Industrial Park commenced operations in September 2021, boasting a remarkable degree of automation exceeding 80%, with nearly 40% of equipment being self-developed. Meanwhile, Honor is also equipped with many laboratories around the Pingshan Intelligent Manufacturing Industrial Park in Shenzhen. The labs primarily focus on future technology pre-research and act as a reserve. Emphasizing basic research and innovation, these labs delve into areas such as new materials, processes, and structures, fostering incubation in these fundamental fields. The core experiments in Honor’s self-built display module laboratory play a pivotal role, particularly in overcoming key challenges in foldable smartphone designs, such as the R&D and design of the screen module. This laboratory facilitates efficient research and production synergy. Be it the mass production and sales of the Honor Magic 5 or the recent foldable smartphone surpassing 1 million units in production within a year, it demonstrates that within just two years of operation, Honor has successfully positioned itself as a formidable player in the large-scale manufacturing of high-end smartphone products.

Reviewing the trajectory of Chinese brands in the foldable smartphone landscape, progressing from single models in the 100,000–200,000 range to the 300,000–500,000 range signifies their journey from 0 to 1 in both product and market endeavors. They are gradually moving from a laboratory stage to a market trial stage. When the lifecycle planning of a single series reaches 1 million units (as is the case in Chinese foldable smartphones), this indicates that the technology has transitioned into the productization stage. Productization, in turn, marks the shift from highly customized and semi-automated production of foldable smartphone parts to standardized, modularized, and serialized supply. This evolution aims to streamline processes, enhance yield, and enable mass production, ultimately reducing the cost of foldable phones. Such advancements are poised to further reduce foldable smartphone prices, benefiting more consumers.

Honor achieved the top position in China’s foldable smartphone market in 3Q23

According to Omdia’s smartphone market tracker report, China’s foldable smartphone segment continues to experience robust growth. In 3Q23, shipments of foldable smartphones in China surpassed 1.7 million units, marking a remarkable 77% year-on-year (YoY) increase and a substantial 46% quarter-on-quarter (QoQ) growth. Notably, this quarter coincides with the introduction of new foldable products from major brands. Honor’s foldable Magic V2, unveiled in July, boasts multiple leading upgrades and strong market demand. It has played a pivotal role in helping Honor secure the top spot in China’s foldable smartphone market for a third quarter with an impressive 28% market share. Compared with the same period last year, Honor has achieved a remarkable 17-fold increase in shipments. The Honor Magic V2 also claimed the title of the leading product in China’s foldable phone market for the quarter with a 25% market share. Thanks to the success of the Magic V2, Honor experienced a 107.5% YoY growth and a 20% QoQ growth in shipments for its Magic high-end series during this period. Cumulatively, the Magic high-end series achieved a nearly 30% YoY growth from the first to the third quarter of this year.

Figure 1: Foldable smartphone market share by brand in the Chinese market Source: Omdia’s preliminary survey results, 3Q23

Honor’s strategic focus is on making foldable smartphones a key product for high-end breakthroughs

In 2H23, Honor strategically defined and accelerated the release schedule for foldable products, setting an industry pace. Within three months, from July to October, the company launched a trio of foldable products: the Magic V2, a flagship foldable device; the V Purse, emphasizing technology and fashion; and the Magic Vs2, targeting cost-effectiveness. This diverse range, priced CNY 5,999–12,999, positions large foldable smartphones squarely within the mainstream consumer price range. This initiative enables a broader consumer base to experience the innovation of the new smartphone. Honor’s approach to foldable smartphones departs from the traditional definition of positioning them solely as flagship products. Instead, the company views foldable smartphones as a distinct product category within the smartphone market. By employing different design forms, varied performance configurations, and alternative material applications, Honor aims to reduce costs and create a diverse portfolio of products at different price points. With the anticipated introduction of Honor’s small foldable products next year, the diversity of the foldable smartphone product lineup is expected to expand further. Currently, the production of most smartphone brands hovers around hundreds of thousands of units, but Honor stands out with its ambitious plan to reach 1 million units in a single product series. This commitment underscores Honor’s confidence in the foldable smartphone market and its strategic significance.

If we want foldable products to sell well in the market, it must work hard to address the pain points of current foldable products. According to market research findings, three critical factors influencing consumer choice in foldable smartphones are weight, price, and durability. Initial industry challenges include the common issue of thickness and heaviness of foldable smartphones. It is very difficult to simultaneously achieve reliability and thinness. The industry is working hard to find the best solution. From the new foldable smartphones released in 2H23, we observe each company has found its own solution to reduce weight and thickness, with Honor’s being one of the most extreme. The hardware architecture of Honor’s foldable smartphones has undergone a transformation. By strategically addressing the weight distribution of components in foldable smartphones, Honor employs new materials and technologies to overcome design limitations. Its key innovations are listed as follows:

• Silicon-carbon anode battery technology: Significantly reduces battery size and weight while maintaining a large battery capacity
• Hinge optimization design: Utilizes new materials and 3D printing technology to substantially decrease the weight and volume of the hinge
• Screen module support frame: Crafted from a new aerospace-grade rare-earth magnesium alloy, reducing overall weight
• Center frame material: Incorporates a new alloy material, further contributing to weight reduction

The introduction of these innovative materials not only addresses current challenges but also sets the direction for future upgrades in foldable smartphones.

Table 1: Honor’s foldable smartphone specifications

Source: Omdia

Chinese brands are gradually leading the industry in folding product hardware specifications

Although most Chinese manufacturers released commercial foldable smartphones slightly later than Samsung, they have only undergone two or three iterations of the product thus far. In contrast, Samsung released its fifth generation of foldable products in August 2023. Moreover, Chinese brands have taken the lead in crucial product design indicators of foldable smartphones, specifically in weight, thickness, and battery capacity. Most Chinese brand products weigh 245g and below, with folded thickness measuring under 12mm. Notably, the Honor Magic V2 set the record for the lightest foldable smartphone at 231g, only to be surpassed by its successor, the Magic Vs2, released in October at an even lighter 229g. The Magic V2 still holds the record for the thinnest foldable smartphone, with its unfolded and folded thicknesses measuring just 4.7mm and 9.9mm, respectively. The Galaxy Z Fold5 does not improve significantly in thinness and lightness compared with the previous generation. In fact, the Galaxy Z Fold5 still holds a gap in weight and thickness compared with new products from Chinese manufacturers in the same period. Owing to Samsung’s coverage and brand advantage in the global high-end market, it should continue to maintain its leading position in foldable smartphone shipments in the future. However, Chinese brands will increase their share of the foldable smartphone market as they upgrade their products and expand to the international market. Companies such as Honor, Transsion Holdings, Lenovo, and OPPO sell foldable smartphones overseas, providing consumers with a wider range of foldable product choices besides Samsung.

One of the key factors contributing to China’s progress in foldable smartphone design is its leading supply chain. Firstly, China’s abundant mineral resources provide a foundation for new material development. Secondly, China has the most complete consumer electronics manufacturing industry cluster globally, with various suppliers capable of providing design and production for diverse special needs of components. Thirdly, China has an open business and market competition environment, and suppliers must continuously innovate their products and technologies to obtain customers and orders. Lastly, a collaborative and dynamic relationship between manufacturers and suppliers fosters creative diversification. Chinese smartphone manufacturers utilize their accumulated R&D advantages and management capabilities to lead suppliers to overcome problems encountered in foldable smartphone design, processing, and material development; complete innovation together; and achieve win-win results.

Table 2: Foldable smartphone specification comparison by brand

Source: Omdia

The advantages within China’s foldable smartphone industry chain should drive further industrial upgrades

The R&D and design of foldable smartphones are marked by high technological innovation, involving significant customization of key components. The components and product are currently characterized by small total quantity, low yield, and high cost. Achieving lightness and low cost while ensuring product stability is a challenge for the industry. Omdia’s foldable smartphone hardware teardown report sheds light on the critical components contributing to the weight of foldable smartphones. The top five components by weight are as follows:

• the battery
• the overall center frame
• the display module
• the hinge
• the smartphone motherboard

These components account for a substantial 78% of the foldable smartphone’s weight. Consequently, efforts to reduce the weight and thickness of foldable smartphones must focus on these key components. Chinese manufacturers have begun forming preliminary industrial advantages by promoting close collaboration with the consumer electronics industry, overcoming key design bottlenecks, and promoting industrial upgrades with high value–added products.

Figure 2: Proportion of component weight in the Huawei Mate X2s Source: Omdia

China has established the world’s largest flexible AMOLED cluster. BOE, Visionox, China Star, and Tianma have all supplied their panels or modules to many foldable smartphone projects. Brands like Honor and Huawei have collaborated with domestic screen manufacturers such as BOE and Visionox from the inception of their foldable products. This collaboration extends to various aspects, including screen brightness, refresh rate, and display color. This collaboration brought significant progress in optimizing the display module. Specifically, the introduction of new alloy materials enhances the stability of the metal back plate, achieving a notable reduction in weight. In addition, there are continuous upgrades in the external glass cover plate and screen protection film material. With the newer iteration of products, almost all foldable smartphones from Chinese brands are starting to choose domestic suppliers.

Battery life is a crucial factor influencing the smartphone user experience. Foldable smartphones face the challenge of reconciling the contradiction between battery capacity and volume. The introduction of silicon-carbon anode material technology has addressed this design challenge, overcoming the limitations of graphite anode material. As manufacturers continue to push the boundaries of fast charging, Honor has taken a distinctive approach by pioneering the use of silicon-carbon anode material technology in its Magic 5 series. Huawei later adopted this technology in its smartphones. Honor’s implementation of the ultrathin card battery (with an average thickness of only 2.72 mm and a capacity of 5,000 mAh)in the Magic V2 has positioned it as a standout design in 2H23. Notably, it has secured the top spot in battery capacity among foldable smartphones. This innovative battery design is expected to be adopted by more manufacturers in subsequent foldable products.

Other key components of foldable smartphones, such as the middle frame, hinge, hinge cover, and back cover, use new alloy materials, glass materials, and molecular membrane materials produced through higher precision CNC cutting, 3D printing, and precision fitting processes. This reduces thickness and weight while ensuring the structural stability of the foldable smartphone product design. These new materials and processes have high added value, which will create more profit for suppliers and promote their development.

As the solution and supply chain for foldable smartphones mature, the application of foldable parts should extend to other products, such as tablets and laptops, presenting additional market opportunities. Furthermore, the integration of foldable smartphone materials and processes into traditional smartphones enhances the overall user experience. The development of the foldable smartphone industry chain drives technological innovation and R&D capabilities in Chinese companies, especially in the fields of advanced material research, precision machining technology, and intelligent manufacturing equipment. It will also promote China’s industry shift from traditional ODMs or OEMs to high-added-value manufacturing or supply, elevating China’s high-end manufacturing capabilities and bringing more business opportunities and sustained competitive advantage to Chinese enterprises.

Appendix

Further reading

Smartphone Model Market Tracker – 1Q23 Database (June 2023)

Author

Zaker Li, Principal Analyst, Mobile Device

[email protected]