China’s premium-smartphone battle is becoming more ambitious, and more expensive. Huawei and Xiaomi Corporation (HKG:1810) have introduced new flagship foldable phones ahead of Apple Inc.’s (NASDAQ:AAPL) latest product launch, giving consumers two very different approaches to turning a smartphone into a larger-screen device.
Huawei’s Mate XT2 folds out twice to produce a tablet-sized display, while Xiaomi’s passport-sized Xiaomi 18 Fold supports three applications side by side when opened. Both devices demonstrate the progress of Chinese smartphone manufacturers, but rising component costs and Huawei’s commanding foldable-market share create significant commercial challenges.
Bull Case
Huawei enters the launch from a position of strength. It controlled 22.6% of China’s overall smartphone market during the second quarter, ahead of Apple’s 18.1%, according to IDC data cited by Reuters. Its position was even stronger in foldables, where Huawei accounted for 68% of Chinese shipments. The Mate XT2 could reinforce that leadership. Huawei remains the only major manufacturer currently selling a tri-fold smartphone, giving the company a distinctive product in the premium market. The new model includes a redesigned hinge, stronger water resistance, as well as a privacy screen designed to prevent people nearby from viewing the display.
Huawei also says its Kirin 9050 Pro processor provides greater computing power while consuming less electricity. Its LogicFolding architecture forms part of the “Tau Scaling Law” approach Huawei introduced in May as it attempts to overcome US restrictions on access to advanced technology. These remain company claims, but they indicate that Huawei continues developing proprietary solutions despite external constraints.
For Xiaomi, the 18 Fold offers a more accessible route into premium foldables. Prices range from 10,999 yuan, or approximately $1,540, to 14,999 yuan, or $2,100. Huawei’s Mate XT2 begins at 19,999 yuan, or approximately $2,980, and reaches 24,999 yuan, or $3,725. That price difference could help Xiaomi reach customers who want a premium foldable without paying for Huawei’s tri-fold design. The 18 Fold weighs 219 grams and measures 5.02 millimeters when unfolded. CEO Lei Jun said it is lighter than Apple’s iPhone Pro Max.
The phone also uses Xiaomi’s internally developed XRing O3 AI processor. Lei said the chip outperforms Apple’s A19 Pro in responsiveness, although that comparison represents Xiaomi’s assessment rather than an independently verified result. Its use of DRAM supplied by Chinese manufacturer CXMT may also support Xiaomi’s effort to develop a more domestically sourced technology ecosystem.
Bear Case
Huawei’s dominance creates a difficult starting point for Xiaomi. Xiaomi held 12.4% of China’s overall smartphone market in the second quarter, while Huawei separately accounted for 68% of the country’s foldable-phone shipments. Xiaomi must persuade customers that its lower-priced design offers enough differentiation, and component inflation could make that harder.
Both Huawei executive Richard Yu and Xiaomi’s Lei highlighted sharply rising memory costs during their launch events. Huawei said its adoption of new technology had created enormous cost pressure, while Xiaomi defended the 18 Fold as offering value despite expensive memory. These pressures create a difficult trade-off. Raising prices may protect margins but restrict demand, while absorbing higher component costs could weaken profitability.
Apple represents another uncertainty. Its latest iPhone series is scheduled to be unveiled on September 9, and expectations are high that the company could introduce a foldable device. That possibility has not been confirmed. Nevertheless, an Apple entry could intensify competition for affluent consumers just as Huawei and Xiaomi attempt to expand their premium positions.
Conclusion
Huawei’s Mate XT2 strengthens an already dominant foldable franchise, while Xiaomi’s 18 Fold combines a lower price with an in-house processor and a compact design. Xiaomi therefore has a credible product for narrowing the gap, but it remains far behind Huawei in Chinese foldable shipments.
The launch improves Xiaomi’s premium credentials, but whether it improves its economics is less certain. Rising memory costs, Huawei’s scale and a possible Apple foldable will determine whether the 18 Fold becomes a meaningful growth driver or remains a technically impressive niche product.
READ NEXT: Can Eli Lilly Catch Novo Nordisk in the Oral GLP-1 Race? AND Abbott vs. Intuitive Surgical: Is Consistent Growth Better Than Premium Growth?
This article is originally published at Insider Monkey.
