South China Morning Post
Sun, March 3, 2024
Along the bustling Luthuli Avenue in downtown Nairobi, banners and billboards advertise mobile phones to the throng of shoppers passing by.
The blue, red, black and white storefronts in the busy Kenyan shopping district denote the colours associated with some of Africa's bestselling phone brands - Tecno, Infinix and iTel.
They are all phones that are made in China. But most people in mainland China will not have heard of them. After all, they have never been sold there.
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That is because all three phone brands are manufactured by Transsion, a Shenzhen-based company that made its fortune exclusively selling phones in Africa - before it expanded into other markets such as Latin America, India, Eastern Europe and Southeast Asia.
In fact, Transsion has made such a success of its sales strategy that in 2023 its Tecno brand sold more smartphones in the Middle East and Africa than Samsung or Apple.
It is a feat that has helped cement Chinese tech diplomacy in the region - and has in turn attracted a growing number of Chinese technology firms into Africa and the Middle East.
Tecno smartphone shipments grew by 77 per cent year on year in the fourth quarter of last year, surpassing Samsung to lead the Middle East and Africa region for the first time, according to data from Hong Kong-based firm Counterpoint Research.
During the same period, Tecno's smartphone shipment market share increased to 20 per cent from 15 per cent in 2022, while Samsung's market share dropped from 24 per cent in 2022 to 18 per cent.
According to Counterpoint, Tecno's growth was driven by handsets in the US$150 price band, with models such as the Tecno Pop 7 and the Camon 20 Pro proving popular with consumers.
Economic factors may also have played a part in Transsion's 2023 success, according to Yang Wang, a senior analyst at Counterpoint Research. He said the growth - seen particularly by Tecno - was mainly due to a much better macroeconomic environment, as inflation and energy prices came down, while local African currencies stabilised across most countries.
Wang said this had a sizeable effect in boosting consumer confidence, particularly among the lower-income audience.
"Transsion brands benefited the most from these tailwinds as they are the most invested in Africa's mid-to-lower tier smartphone segments, among the biggest brands," he said.
Sell quality phones in the budget segment, such as this Tecno Spark 8c, has been a winning formula for Transsion. Photo: Shutterstock alt=Sell quality phones in the budget segment, such as this Tecno Spark 8c, has been a winning formula for Transsion. Photo: Shutterstock>
The company's products in the affordable segment have been a key part of its success. Looking at African sales alone, Tecno had already managed to pass Samsung back in 2020. That was largely due to the successful launch of phone models in the lower price band, as well as continued market spending.
Wang said Tecno was notable in its continued investments in marketing and channel penetration, as well as ambitious plans to launch premium-grade smartphones such as foldables, which increased the brand's credibility among audiences.
It is a strategy that has worked. Transsion is now the dominant mobile phone manufacturer through the entire Middle East and Africa region, taking more than 36 per cent of the shipments market share in the fourth quarter of 2023 and 32 per cent across the whole year.
Together, Tecno, Infinix and iTel accounted for 48 per cent of the smartphone market in Africa in 2023. Tecno alone held 26 per cent of the African smartphone market share while Infinix and iTel had 12 per cent and 10 per cent market shares respectively.
For more than a decade, Transsion, which is listed on the Star Market section of the Shanghai Stock Exchange, made its money by exclusively selling its mobile phones in Africa. But in recent years it has expanded into other markets.
Its success has been attributed to superior marketing and understanding consumer needs, such as making dual SIM card phones and camera phones better calibrated for darker skin tones.
According to technology research firm International Data Corporation (IDC), Transsion shipped 95 million smartphone units last year - 30.8 per cent more than it did in 2022. IDC said Africa was the biggest contributor to Transsion's entry into the top five worldwide vendors for the first time.
Meanwhile, South Korea's Samsung ranks second with a market share of 16 per cent in Africa, though sales remained flat in 2023.
Besides Transsion, other Chinese mobile phone brands include Xiaomi and Oppo. Xiaomi, one of the top-selling Chinese smartphones globally, had a 7 per cent market share in Africa in 2023, mainly due to widening product availability and geographic reach. Oppo had a 5 per cent smartphone shipment share in Africa.
But Transsion did not start big when it entered the African market in 2008. Back then, when it launched its operations in Kenya, its office was on the second floor of a building along that same, crowded Luthuli Avenue which these days is festooned with the company's branding and billboards.
It was from this noisy street that the company established its base to grow and expand into other markets in Africa, including setting up a manufacturing plant in Ethiopia.
Since those early days, Transsion has now moved its office to a quieter part of the city at Cardinal Otunga Plaza on Kaunda Street in central Nairobi, but it has kept the Luthuli Complex office as a service centre.
Transsion began its African trading from a nondescript office on the second floor of a building in downtown Nairobi, Kenya. It now dominates the phone market across the continent. Photo: Shutterstock alt=Transsion began its African trading from a nondescript office on the second floor of a building in downtown Nairobi, Kenya. It now dominates the phone market across the continent.
Photo: Shutterstock>
However not all Chinese phone companies have had such sales success stories in Africa. Huawei Technologies has seen its market share in Africa drop from 10 per cent in 2019 to about 1 per cent in recent years.
"Huawei was indeed one of the biggest players in the region, but sales dropped sharply after 2020 when US sanctions starved the company from access to GMS [Google Mobile Services] and chipsets," Wang said.
"[Huawei] has been on the rebound in 2023 but now accounts for less than 1 per cent of the market."
That said, Huawei Technologies is a big player in the enterprise business in Africa, where it dominates built data centres, cloud services, networks and internet connectivity infrastructure.
Sub-Saharan geoeconomic analyst Aly-Khan Satchu said Chinese mobile phone brands "are ubiquitous across the continent".
He said this speaks to the Chinese ability to get up close and personal to its demand curve as well as the skill to price appropriately without compromising on the features suite. He added that this is not unique to handsets, but applies across the consumer space.
For Huawei, Satchu said the company is competing at higher price points - and the market at those points remains thin.
"The issue of Google Mobile Services has no doubt galvanised Huawei," Satchu said. "I give it a maximum of 24 months before Huawei provides the market with a better operating system."
New Zealand-based Kenyan technology consultant Peter Wanyonyi said accessing apps such as WhatsApp, Facebook or TikTok requires smartphones.
"That is where the likes of Tecno have found a winning formula: they provide smartphone capability at very affordable prices," Wanyonyi said.
He said this used to be Huawei's market, but ever since it got locked out of Google's Android ecosystem, the Chinese tech giant has struggled to produce smartphones that provide access to the Android ecosystem - which is what Africa's middle class runs on.
"Without an equivalent set of devices at an affordable point from Huawei, a gap opened up in the African smartphone market - and there was a market in the gap. This is what Tecno and similar phone makers have exploited to quickly eat Huawei's lunch," Wanyonyi said.
Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.
However not all Chinese phone companies have had such sales success stories in Africa. Huawei Technologies has seen its market share in Africa drop from 10 per cent in 2019 to about 1 per cent in recent years.
"Huawei was indeed one of the biggest players in the region, but sales dropped sharply after 2020 when US sanctions starved the company from access to GMS [Google Mobile Services] and chipsets," Wang said.
"[Huawei] has been on the rebound in 2023 but now accounts for less than 1 per cent of the market."
That said, Huawei Technologies is a big player in the enterprise business in Africa, where it dominates built data centres, cloud services, networks and internet connectivity infrastructure.
Sub-Saharan geoeconomic analyst Aly-Khan Satchu said Chinese mobile phone brands "are ubiquitous across the continent".
He said this speaks to the Chinese ability to get up close and personal to its demand curve as well as the skill to price appropriately without compromising on the features suite. He added that this is not unique to handsets, but applies across the consumer space.
For Huawei, Satchu said the company is competing at higher price points - and the market at those points remains thin.
"The issue of Google Mobile Services has no doubt galvanised Huawei," Satchu said. "I give it a maximum of 24 months before Huawei provides the market with a better operating system."
New Zealand-based Kenyan technology consultant Peter Wanyonyi said accessing apps such as WhatsApp, Facebook or TikTok requires smartphones.
"That is where the likes of Tecno have found a winning formula: they provide smartphone capability at very affordable prices," Wanyonyi said.
He said this used to be Huawei's market, but ever since it got locked out of Google's Android ecosystem, the Chinese tech giant has struggled to produce smartphones that provide access to the Android ecosystem - which is what Africa's middle class runs on.
"Without an equivalent set of devices at an affordable point from Huawei, a gap opened up in the African smartphone market - and there was a market in the gap. This is what Tecno and similar phone makers have exploited to quickly eat Huawei's lunch," Wanyonyi said.
Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.
Tech war: Huawei's AI chip capabilities under intense scrutiny after market leader Nvidia taps it as potential rival
South China Morning Post
Sun, March 3, 2024
The closely-guarded semiconductor capabilities of US-sanctioned Huawei Technologies have come under fresh scrutiny after Nvidia identified the Chinese telecommunications equipment giant as a potential rival in artificial intelligence (AI) chips for the first time.
With Nvidia currently unable to ship its advanced graphics processing units (GPUs) to mainland China under Washington's export restrictions, a new AI chipset from Huawei has emerged as a replacement for the US firm's Chinese products, industry insiders and analysts say.
The Huawei Ascend 910B, already available via distributor channels on the mainland, is considered by some industry participants to be on par in terms of computing power with Nvidia's sought-after A100 data-centre GPUs. Huawei has not made any public comment on the 910B.
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The Ascend 910B is believed to succeed the Ascend 910, which was released by Huawei in August 2019, three months after it was put on a trade blacklist by the US Commerce Department. The chip can compete with Nvidia's A100 in terms of powering AI algorithms, according to Dylan Patel, chief analyst at San Francisco-based semiconductor research firm SemiAnalysis.
A Chinese flag is seen near the logo atop Semiconductor Manufacturing International Corp's headquarters in Shanghai. The country's top contract chip maker is said to be the supplier of Huawei Technologies' new artificial intelligence chipset, the Ascend 910B. Photo: Bloomberg alt=A Chinese flag is seen near the logo atop Semiconductor Manufacturing International Corp's headquarters in Shanghai. The country's top contract chip maker is said to be the supplier of Huawei Technologies' new artificial intelligence chipset, the Ascend 910B. Photo: Bloomberg>
"It [the Ascend 910B] is a bit above the A100 theoretically," Patel said, adding that the chip is fabricated by China's top foundry, Semiconductor Manufacturing International Corp (SMIC), on a 7-nanometre process.
US sanctions since 2019 have restricted Huawei's semiconductor development and dealt a severe blow to its smartphone business. But the Shenzhen-based company has been quietly bolstering its chip business by partnering with various domestic suppliers, according to several people familiar with the matter, who declined to be identified due to the sensitivity of the matter.
Huawei showed its resilience in August last year, when it surprised the industry with the Mate 60 Pro, the company's first 5G smartphone release since the Mate 40 series in October 2020. Sales of the new handset propelled Huawei back to the top of the domestic smartphone market earlier this year.
The SMIC-made Kirin 9000s processor that powers the Mate 60 Pro sparked intense industry speculation over how Huawei managed to overcome a blanket US chip ban.
A Kirin 9000s processor, developed by Huawei Technologies chip design arm HiSilicon, is taken from a Mate 60 Pro 5G smartphone in Ottawa, capital of Canada, on September 3, 2023. Photo: Bloomberg alt=A Kirin 9000s processor, developed by Huawei Technologies chip design arm HiSilicon, is taken from a Mate 60 Pro 5G smartphone in Ottawa, capital of Canada, on September 3, 2023. Photo: Bloomberg>
At the domestic release of the Ascend 910, Huawei touted the chip at the time as "the world's most powerful AI processor", fabricated by the world's top contract chip maker, Taiwan Semiconductor Manufacturing Co, using a 7-nm process.
Huawei's new AI chip appears to have emerged around the same time as the Mate 60 Pro's release last August. Chinese online search and AI giant Baidu ordered 1,600 of Huawei's Ascend 910B chips in the same month, according to a Reuters report in November 2023 that cited a source.
Two weeks before Reuters published that report, Chinese AI company iFlytek launched its Feixing One computing platform based on Huawei's Ascend chips. This means the iFlytek Spark 3.0, the firm's updated large language model (LLM), may have been developed on AI chips. LLMs are the technology used to train generative AI services like ChatGPT.
Huawei declined to comment on the matter.
Jensen Huang, the co-founder, president and chief executive of US chip design firm Nvidia, attends a session of the World Governments Summit in Dubai, United Arab Emirates, on February 12, 2024. Photo: Reuters alt=Jensen Huang, the co-founder, president and chief executive of US chip design firm Nvidia, attends a session of the World Governments Summit in Dubai, United Arab Emirates, on February 12, 2024. Photo: Reuters>
In an interview with tech media outlet Wired last month, Nvidia chief executive Jensen Huang described Huawei as a "really, really good company".
"They're limited by whatever semiconductor processing technology they have, but they'll still be able to build very large systems by aggregating many of those chips together," Huang said.
Amid the increased focus on generative AI in the past year and tighter US sanctions, Huawei and SMIC have allocated more capacity to AI chips, according to a Reuters report last month.
One GPU distributor, who declined to be named due to the sensitivity of the matter, said that the Ascend 910B is "available for order, but supply is really tight at the moment".
A server used for AI training and embedded with eight Ascend 910B cards costs around 1.5 million yuan (US$208,395), which is roughly in the same range as A100 server prices quoted in black market channels, according to a separate person familiar with the matter who also declined to be named.
Huawei has not made any comment on the Ascend 910B, despite reiterating that AI is a "key strategy" ahead of the firm's exhibition at the four-day trade show MWC Barcelona in Spain last week.
Many analysts and industry professionals are reluctant to comment on the Nvidia and Huawei showdown, although they pointed out that the US chip designer has depth in GPUs and benefits from its software ecosystem CUDA, a computing platform that allows developers to unleash the full potential of semiconductors.
"CUDA is sticky, Nvidia did all of this hard work on its own and is reaping the benefits," said Brian Colello, technology equity strategist at Morningstar. "Huawei and its software partners will need to build out an ecosystem comparable [to Nvidia's CUDA] when it comes to tools to build AI models."
Despite lagging CUDA's 2 million-strong list of registered developers, Huawei has its proprietary Compute Architecture for Neural Networks, a platform that connects Ascend hardware and software, crucial to unlocking AI computing power.
Colello said Huawei might have to make similar [big] investments in mainland China to strengthen its software capabilities. He added that perhaps other companies will work on the software libraries, while Huawei focuses on chip design.
"Huawei's strength is not in the software stack," said one Shanghai-based tech investor who requested anonymity. "The US sanctions put limits on chip performance and production yields."
Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.
South China Morning Post
Sun, March 3, 2024
The closely-guarded semiconductor capabilities of US-sanctioned Huawei Technologies have come under fresh scrutiny after Nvidia identified the Chinese telecommunications equipment giant as a potential rival in artificial intelligence (AI) chips for the first time.
With Nvidia currently unable to ship its advanced graphics processing units (GPUs) to mainland China under Washington's export restrictions, a new AI chipset from Huawei has emerged as a replacement for the US firm's Chinese products, industry insiders and analysts say.
The Huawei Ascend 910B, already available via distributor channels on the mainland, is considered by some industry participants to be on par in terms of computing power with Nvidia's sought-after A100 data-centre GPUs. Huawei has not made any public comment on the 910B.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
The Ascend 910B is believed to succeed the Ascend 910, which was released by Huawei in August 2019, three months after it was put on a trade blacklist by the US Commerce Department. The chip can compete with Nvidia's A100 in terms of powering AI algorithms, according to Dylan Patel, chief analyst at San Francisco-based semiconductor research firm SemiAnalysis.
A Chinese flag is seen near the logo atop Semiconductor Manufacturing International Corp's headquarters in Shanghai. The country's top contract chip maker is said to be the supplier of Huawei Technologies' new artificial intelligence chipset, the Ascend 910B. Photo: Bloomberg alt=A Chinese flag is seen near the logo atop Semiconductor Manufacturing International Corp's headquarters in Shanghai. The country's top contract chip maker is said to be the supplier of Huawei Technologies' new artificial intelligence chipset, the Ascend 910B. Photo: Bloomberg>
"It [the Ascend 910B] is a bit above the A100 theoretically," Patel said, adding that the chip is fabricated by China's top foundry, Semiconductor Manufacturing International Corp (SMIC), on a 7-nanometre process.
US sanctions since 2019 have restricted Huawei's semiconductor development and dealt a severe blow to its smartphone business. But the Shenzhen-based company has been quietly bolstering its chip business by partnering with various domestic suppliers, according to several people familiar with the matter, who declined to be identified due to the sensitivity of the matter.
Huawei showed its resilience in August last year, when it surprised the industry with the Mate 60 Pro, the company's first 5G smartphone release since the Mate 40 series in October 2020. Sales of the new handset propelled Huawei back to the top of the domestic smartphone market earlier this year.
The SMIC-made Kirin 9000s processor that powers the Mate 60 Pro sparked intense industry speculation over how Huawei managed to overcome a blanket US chip ban.
A Kirin 9000s processor, developed by Huawei Technologies chip design arm HiSilicon, is taken from a Mate 60 Pro 5G smartphone in Ottawa, capital of Canada, on September 3, 2023. Photo: Bloomberg alt=A Kirin 9000s processor, developed by Huawei Technologies chip design arm HiSilicon, is taken from a Mate 60 Pro 5G smartphone in Ottawa, capital of Canada, on September 3, 2023. Photo: Bloomberg>
At the domestic release of the Ascend 910, Huawei touted the chip at the time as "the world's most powerful AI processor", fabricated by the world's top contract chip maker, Taiwan Semiconductor Manufacturing Co, using a 7-nm process.
Huawei's new AI chip appears to have emerged around the same time as the Mate 60 Pro's release last August. Chinese online search and AI giant Baidu ordered 1,600 of Huawei's Ascend 910B chips in the same month, according to a Reuters report in November 2023 that cited a source.
Two weeks before Reuters published that report, Chinese AI company iFlytek launched its Feixing One computing platform based on Huawei's Ascend chips. This means the iFlytek Spark 3.0, the firm's updated large language model (LLM), may have been developed on AI chips. LLMs are the technology used to train generative AI services like ChatGPT.
Huawei declined to comment on the matter.
Jensen Huang, the co-founder, president and chief executive of US chip design firm Nvidia, attends a session of the World Governments Summit in Dubai, United Arab Emirates, on February 12, 2024. Photo: Reuters alt=Jensen Huang, the co-founder, president and chief executive of US chip design firm Nvidia, attends a session of the World Governments Summit in Dubai, United Arab Emirates, on February 12, 2024. Photo: Reuters>
In an interview with tech media outlet Wired last month, Nvidia chief executive Jensen Huang described Huawei as a "really, really good company".
"They're limited by whatever semiconductor processing technology they have, but they'll still be able to build very large systems by aggregating many of those chips together," Huang said.
Amid the increased focus on generative AI in the past year and tighter US sanctions, Huawei and SMIC have allocated more capacity to AI chips, according to a Reuters report last month.
One GPU distributor, who declined to be named due to the sensitivity of the matter, said that the Ascend 910B is "available for order, but supply is really tight at the moment".
A server used for AI training and embedded with eight Ascend 910B cards costs around 1.5 million yuan (US$208,395), which is roughly in the same range as A100 server prices quoted in black market channels, according to a separate person familiar with the matter who also declined to be named.
Huawei has not made any comment on the Ascend 910B, despite reiterating that AI is a "key strategy" ahead of the firm's exhibition at the four-day trade show MWC Barcelona in Spain last week.
Many analysts and industry professionals are reluctant to comment on the Nvidia and Huawei showdown, although they pointed out that the US chip designer has depth in GPUs and benefits from its software ecosystem CUDA, a computing platform that allows developers to unleash the full potential of semiconductors.
"CUDA is sticky, Nvidia did all of this hard work on its own and is reaping the benefits," said Brian Colello, technology equity strategist at Morningstar. "Huawei and its software partners will need to build out an ecosystem comparable [to Nvidia's CUDA] when it comes to tools to build AI models."
Despite lagging CUDA's 2 million-strong list of registered developers, Huawei has its proprietary Compute Architecture for Neural Networks, a platform that connects Ascend hardware and software, crucial to unlocking AI computing power.
Colello said Huawei might have to make similar [big] investments in mainland China to strengthen its software capabilities. He added that perhaps other companies will work on the software libraries, while Huawei focuses on chip design.
"Huawei's strength is not in the software stack," said one Shanghai-based tech investor who requested anonymity. "The US sanctions put limits on chip performance and production yields."
Copyright (c) 2024. South China Morning Post Publishers Ltd. All rights reserved.
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