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Pura 70 likely contains China-made chip, analysts say

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Huawei fans line up for new phone outside stores across

China

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Pura 70 series has four variants, starting price of $760

(Adds buyer's comments in paragraphs 6-8, company's plans to

roll out Mate 70 and upgrade its operating system in paragraphs

4, 17-18)

By Josh Ye, David Kirton and Brenda Goh

HONG KONG/SHENZHEN/SHANGHAI, April 18 (Reuters) -

C hinese technology giant Huawei started selling two models of

its highly anticipated, high-end Pura 70 smartphone series on

Thursday that many analysts expect to contain an advanced

China-made chip like its Mate 60 handset.

The Pura series developed by the Shenzhen-headquartered

company has advanced cameras and is known for its sleek design,

while the Mate series emphasises performance and business

features.

The launch of Huawei's Mate 60 series last year was

celebrated by Chinese state media as a triumph over U.S.

sanctions on the firm, as the handsets contain an advanced

China-made chip that is considered only a few generations behind

cutting-edge chips used by Western tech giants like Apple ( AAPL )

and Google in terms of computing power.

Eric Xu, Huawei's acting chairman, on Wednesday told a forum

in Shenzhen that the company also plans to roll out a Mate 70

smartphone this year.

The Pro and Ultra versions of the Pura 70 were available

on Thursday, while the Plus and base versions will begin sales

on April 22. The phones were out of stock at Huawei's official

online store just a minute after sales started, and hundreds of

the brand's fans lined up at Huawei stores in Beijing, Shanghai

and Shenzhen.

One customer, Lucas Zhuang, tested the network speed of

the Pura 70 and said it was at the level of 5G. Washington has

banned the licensing of 5G chips to China but Huawei's Mate 60

phones were already able to achieve 5G speed in many cases

despite Huawei not branding it as 5G.

"We didn't know what chip the Pura 70 has inside. We only

found out after we bought it," Zhuang, who already owns the Mate

60, told Reuters after waiting in line at Huawei's flagship

store in Shanghai.

"But we believe ... the chip it has will certainly meet

people's needs."

Ivan Lam, a senior analyst at research firm

Counterpoint, said he expected shipments of about 60 million

units from Huawei this year, with the Pura 70 series being an

important catalyst. Last year, Huawei sold about 32 million

smartphones.

"There may be some shortage at various channels but

supply will be much better compared to when the Mate 60 was

launched. We don't expect any longlasting shortage," he said.

The Pura 70 series has four variants: the 70, the 70 Plus,

the 70 Pro and the 70 Ultra. The starting price for the Pura 70

series is 5,499 yuan ($760.06).

CHIP CHALLENGE

The launch of the Mate 60 Pro last August sparked a

spike in Huawei's smartphone sales. According to Counterpoint,

in the first six weeks of 2024, Huawei saw unit sales rise by

64% year-on-year. Meanwhile, Apple's ( AAPL ) iPhone sales in China fell

24% during the same period.

Huawei's Kirin 9000S chip was reportedly manufactured by

China's Semiconductor Manufacturing International Corporation

(SMIC) despite U.S. export restrictions seeking to

limit Beijing's chip-making capabilities.

It was seen as a symbol of China's technological resurgence

despite Washington's ongoing efforts to cripple its capacity to

produce advanced semiconductors.

The Biden administration began a review of the chip earlier

this year and said last month that SMIC might have violated U.S.

export rules, while adding it was still evaluating the

situation.

Besides targeting China's chip manufacturers, the U.S. has

imposed trade restrictions on Huawei since 2018, viewing the

company and its products as a national security risk, which the

company denies.

Elaborating on the pending Mate 70 smartphones on Tuesday,

Xu said the goal is for it to use a "pure" version of its

HarmonyOS operating system, developed in 2019 after U.S.

sanctions cut Huawei's access to U.S. technologies such as

Google's Android.

HarmonyOS had still been reliant on the Android application

ecosystem but Huawei plans to cut that relationship and make

HarmonyOS completely independent and able to compete with

Apple's ( AAPL ) iOS and Android, he added.

($1 = 7.2350 Chinese yuan)