In Huawei’s battle against Apple, chips are still a weakness: Analyst

As Huawei tries to upstage Apple‘s new iPhone with the launch of its own ‘trifold phone’ on Tuesday, its chip capabilities remain a weakness, despite recent breakthroughs, according to one analyst. 

Speaking to CNBC’s “Squawk Box Asia” on Tuesday, Martin Yang, senior analyst of emerging technologies at Oppenheimer & Co., said Huawei’s chip remains two or three years behind the cutting edge. 

The gap on technology for their systems-on-chip, or SoCs, that merge central processing with cellular connectivity, is “widening because [Huawei] still doesn’t have access to any below 7 nanometer processes,” said Yang. In chip manufacturing, a nanometer denotes the size of transistors on a processor.

The smaller the size of a transistor, the more can be fit on a chip, increasing its level of advancement. 

Huawei had made a smashing breakthrough last year when it released its Mate 60 smartphone, which included an advanced 7-nanometer chip originating from China. 

The speed in which Chinese firms were able to reach this benchmark surpassed what many analysts thought possible under U.S. trade restrictions that limited China’s access to advanced semiconductor tech. 

On the back of this success, Huawei has been able to take back market share from Apple in China, the largest smartphone market in the world. 

However, unlike with the Mate 50, Huawei has not announced a big chip breakthrough for its latest phone launch.  

Meanwhile, Apple is now on its second generation of 3 nanometer processes, and are already showing a 10% to 15% performance boost on this year’s phone compared to last year’s first generation 3 nanometer process, according to Yang. 

“I think the chip will not be a big focus area or big marketing point for Huawei’s upcoming phone this week,” Yang said. 

Instead, the company will likely try to downplay this chip disadvantage in the coming launch week and instead try to highlight that its phone is the first trifold phone on the market, he added. 

Huawei has been accepting preorders for the foldable phone, the Mate XT, since Sept. 7. According to its website, the phone had already received more than 3.5 million preorders as of Tuesday. 

However, the Mate 60 RS, which Huawei released last year similarly had respectable reservations numbers, but failed to transfer them to actual sales, according to Yang. 

“I wouldn’t expect real world shipments in the [3 million range],” he said.

Speaking to CNBC’s “Street Signs Asia,” on Tuesday, Navkendar Singh, of the International Data Corporation, said that while Huawei has dominated in sales of foldable smartphones, the market remains niche due to consumer concerns about price and functionality.