HONGKONG (Reuters) – A five-year-old Chinese smartphone company, whose high-end products are barely known outside of a tech-savvy niche, enters the US market on Monday, supported by two key local allies: chip maker Qualcomm (QCOM.O) and mobile operator T-Mobile.
FILE PHOTO: OnePlus handsets will be featured during a press conference in Mumbai, India on July 31, 2018. REUTERS / Francis Mascarenhas / File Photo
OnePlus' move to Shenzhen comes after US mobile operators AT & T and Verizon withdrew plans to co-operate with China's Huawei on high-end phones this year in the face of pressure from the US government, which sees Huawei as a security risk.
But the OnePlus Alliance, announced today in New York, shows how many US-China business relationships, including the most advanced technologies, are progressing despite the US trade war. According to Samsung, Samsung and LG Electronics, OnePlus has become # 3 customer for Qualcomm's most expensive cell phone chips, according to market research firm Canalys.
Qualcomm President Cristiano Amon presented 29-year-old OnePlus founder Carl Pei at his annual partner meeting in Hong Kong last week, during which Pei told the audience that his company would be one of the first companies to open a fifth-generation (5G ) mobile technology with Qualcomm chips.
In an interview, Pei declined to comment on details of US carrier relations. But T-Mobile executives will be part of the Monday event and sources said the company would sell OnePlus phones. Such carrier partnerships are critical to influencing the US smartphone market.
"I do not know if it's a good time for anyone else," Pei said of the prospect of entering the US carrier-bundled phone market – the dominant channel of distribution there. "It's a good time for us."
The phone, which will be released on Monday, is called 6T, is sold at a price of over $ 500, but includes features that are normally only available on more expensive handheld devices. Xiaomi, a Chinese competitor focused on low-cost mobile phones, has announced that he plans to launch in the US next year, but does not respond to a request for a comment on these plans.
OnePlus is unusual among Chinese technology companies, which typically focus on bulk products for domestic customers. In contrast, OnePlus sells only premium phones that cost $ 400 or more, almost all online except in India, and generates two-thirds of its sales outside of China.
With a market share of 40 percent, the company has become the top seller of premium smartphones in India, a price-sensitive market in which top phones from Apple and Samsung have gained little momentum, according to data from Counterpoint.
Worldwide, Apple dominates in the over $ 400 phone category with 43 percent market share, followed by Samsung (24 percent), OPPO (10 percent), Huawei (9 percent), Xiaomi (3 percent) and OnePlus (2 percent). Said the counterpoint.
Within the company, which employs about 1,000 people, less than 100 are dedicated to sales, while more than half are in product research and development, Pei said.
OnePlus is associated with OPPO, a Chinese smartphone maker, and a large group of mid-range phones that are sold worldwide and cost about $ 300. Canalys analyst Mo Jia said this relationship is critical to helping OnePlus keep costs low.
Pei said OnePlus shares its procurement channels and supply chain with OPPO, making it cheaper to produce in China and India than others.
According to Chinese companies, the two companies have common shareholders, including retired Chinese electronics magnate Duan Yongping, who also owns Vivo, another major Chinese smartphone supplier. Both OPPO and Vivo are known for aggressive offline marketing and massive distribution channels that reach small-town customers in China, India and other developing markets.
Qualcomm is committed to supporting OnePlus to maintain its lead in the premium mobile chip market.
"Most premium smartphone players, including Apple, Samsung and Huawei, now have their own silicon and use it mainly for their high-end smartphones," said IDC Senior Research Director Kiranjeet Kaur.
Qualcomm, a pioneer of mobile key technologies, is in a bitter licensing dispute with Apple, which is increasingly developing its own processors.
Huawei, which replaced Apple as Samsung's second-largest smartphone maker in the second quarter, sells high-end phones with their own Kirin chipsets, while some low-end models use Qualcomm chips.
Although Huawei said it had no plan to sell its chips to outsiders, the company is increasingly moving from a customer to a competitor to Qualcomm as the telecommunications industry moves to 5G technology.
Qualcomm President Amon described the delicate situation as a "coopetition relationship" last week at the summit.
OnePlus, which has sent the world's first 5G tweet in a test on Friday, said it will launch a 5G phone next year.
Pei ignored any fears that consumer sentiment in the US would be affected by the trade dispute between China and the US. "At the end of the day, all you can control is your own [product], "
Pei, who was born in China and grew up in Sweden, said the brand is intercultural and international: "When we started, we saw that social media can talk to anyone around the world as long as you have one can speak language. "
Reporting by Sijia Jiang; Editing by Gerry Doyle