A Chinese tech giant’s new phone leaves 1 question for investors

If your next phone costs more than the one in your pocket, blame the memory chips inside it. Huawei Technologies has just admitted as much.

Richard Yu, who runs Huawei’s consumer business, said rising memory prices have added about $200 on average to the cost of each handset, according to Reuters. “Moving forward, we will have to increase our prices, too,” he told reporters, according to Mobile World Live.

That warning came with the Mate 90 series, launched on Thursday, Oct. 1, 2026, China’s National Day holiday. The Mate 90 Pro Max with 512GB of storage costs 9,999 yuan ($1,491), about 2,000 yuan ($300) more than its predecessor at launch, Reuters reported.

Buyers are pulling back, with China’s smartphone sales down by double digits in August and September, according to CNBC, citing Counterpoint Research.

Price is the visible problem. The bigger one sits on the circuit board. The premium Mate 90 models run on a Kirin chip built with a Huawei technique called LogicFolding, which stacks a chip’s wiring in three dimensions but needs more silicon wafers to make, Reuters reported.

That leaves investors with one question. It is whether China’s chip factories can produce enough of these processors for Huawei to sell phones abroad again without shortchanging its business at home.

I think that answer matters more than any benchmark on the launch slide.

Huawei’s comeback abroad runs through one crowded foundry

Yu was blunt about how far Huawei has fallen outside China.

The company shipped more than 240 million smartphones in 2019 but now sells only several million a year overseas, he said at a roundtable with foreign reporters, his first since 2019, according to CNBC.

Huawei plans to take its HarmonyOS software overseas within one to three years, CNBC reported.

Software is the easy part. In a Huawei press release summarizing the roundtable, Yu said he hopes production capacity will “ramp up in China’s semiconductor industry” so Huawei can build more advanced products for buyers at home and abroad. The overseas plan depends on factories that Huawei does not run.

Huawei has not said who makes its Kirin chips. Semiconductor Manufacturing International Corp., China’s largest contract chipmaker, is widely believed to produce them, along with Huawei’s Ascend AI processors, according to Reuters.

SMIC ran its plants at 93.7% utilization in the second quarter, according to its results filing, leaving little room to spare.

That same capacity also feeds Huawei’s AI push. Huawei planned to raise output of its Ascend AI chips to as many as 1.6 million dies in 2026, Bloomberg reported last year, as government controls kept American AI chips largely out of China.

Phones for overseas buyers will be held up behind those AI chips.

The renewed car deal reads like a quiet step back

On the same day the phones launched, Huawei signed a new five-year agreement with Seres Group, the automaker behind the Aito brand, according to CnEVPost. The details point the other way.

On Tuesday, Sept. 15, 2026, the two companies put Seres in charge of Aito’s product definition, design, marketing, retail, and service, with Huawei moving into a support role, CnEVPost reported.

I read this as Huawei loosening its grip on its biggest car partnership while it puts its weight behind phones and chips.

The car numbers explain the timing. HIMA, Huawei’s alliance of partner car brands, delivered 37,490 vehicles in September, down 29% from a year earlier, according to CnEVPost.

Seres’ Shanghai-listed shares have dropped more than 60% this year, according to CNBC. That tells me the market sees Seres as carrying more risk on its own.

More Chinese Tech:

• China just launched a $19,170 electric vehicle
• Huang doubles down on Chinese AI as Bessent threatens sanctions
• ‘Too late’ for Europe, Ford CEO warns as Chinese cars eye U.S.

China’s chip supply now sets Huawei’s pace

Huawei’s consumer business brought in 344.5 billion yuan (about $49 billion) in 2025, up just 1.6% from a year earlier, its annual report confirmed. Growth that thin pushes any company to hunt for new markets.

Yet Yu also conceded that Huawei still faces constraints in the supply of advanced chips, Reuters reported.

For investors who cannot buy Huawei, a private company, SMIC is the closest publicly traded way to follow the story. Its shares slipped 0.7% on Friday, Oct. 2, 2026, the first Hong Kong session after the launch, according to Stock Analysis.

The 23 analysts tracked by Stock Analysis rate SMIC a Buy on average, with a 12-month price target near HK$96 (about $12).

Huawei demand supports that view. It also tests how far SMIC can stretch its advanced lines, and its next quarterly report should show whether new capacity is arriving.

U.S. export controls were meant to slow China’s chip progress, and Huawei’s answer has been a clever design that squeezes more out of the capacity China already has.

The pace of that capacity growth will decide whether Huawei becomes a global phone brand again or stays a very large Chinese one.

Related: China suspects ulterior motive for U.S. AI slowdown