Editor | Jiran

On September 10, Huawei officially launched the world's first mass-produced triple-folding screen phone, the Mate XT Masterpiece, to the public.

The Mate XT Masterpiece, with a thickness of 3.6 mm and a 10.2-inch screen, sets a new record as the thinnest and largest folding screen phone globally. During the launch event, a series of "obscure terms" were used to introduce the highlights of this phone: the largest UTG glass in the industry, a layer of non-Newtonian fluid material applied to the screen surface, which improves impact resistance by 30%, equipped with the Pangu large model, and boasts system-level AI capabilities such as AI senior editor, AI information consultant, AI image expansion, AI removal, and AI cloud enhancement. In other words, Huawei's Mate XT Masterpiece boasts top-tier comprehensive specifications in the industry. With a starting price of 19,999 yuan, the Mate XT Masterpiece is roughly in line with previous market predictions of around 20,000 yuan. However, despite its relatively high price, it still fails to dampen the enthusiasm of end consumers.

Image source: Huawei launch event

After the launch event, Huawei's official website showed that the number of reservations for the Mate XT Masterpiece had approached 5 million. On Xianyu, the Mate XT Masterpiece was being scalped for prices ranging from 50,000 to 60,000 yuan, with some sellers even asking for 100,000 yuan, representing a premium rate of nearly five times. Some sellers even offered proxy purchase services for prices ranging from 1,000 to 2,000 yuan.

Image source: Huawei's official website

Image source: Xianyu app

Image source: Xianyu app

Compared to online e-commerce platforms, the offline scene was even more frenetic. Li Ming (a pseudonym), a salesperson at a Huawei store, told us that long before the launch of the Huawei Mate XT Masterpiece, a large number of consumers had visited the store to inquire about availability. Although Huawei allocated different quantities of stock to different stores, it explicitly stipulated that if a retail store opened the packaging in advance, it would be subject to penalties starting at 500,000 yuan per unit. After the conclusion of the Huawei Mate XT Masterpiece event, long queues formed outside the stores.

Image source: Provided by the interviewee

Behind the frenzy of consumers, the Mate XT Masterpiece is fueling a Profitable Industry Chain .

01

Mate XT Masterpiece, scalped to 650,000 yuan

Scalpers serve as a barometer for measuring the success of a consumer electronics product. Whenever a profitable consumer electronics product emerges, scalpers are sure to be present. Although Apple and Huawei's new product launches coincided this year, the reception among scalpers was polar opposite for the iPhone 16 and the Huawei Mate XT Masterpiece. Li Ya (a pseudonym), a scalper from Shenzhen's Huaqiang North, told us that after watching Apple's iPhone 16 launch event, many scalpers realized that there was no need to offer high prices for the iPhone 16.

Compared to the iPhone 15, the iPhone 16 features a new A18 series chip and an added "camera control" button. These two relatively minor "innovations" failed to ignite enthusiasm among end consumers, and many even anticipated that buying an iPhone 15 would be a more cost-effective option. Consequently, many scalpers in the industry refrained from offering high prices for iPhone 16s in front of Apple stores, unlike in previous years. Even those who attempted to take a chance offered relatively low prices. For instance, on the morning of September 10, the iPhone 16 was being offered with an additional 350 to 650 yuan, the iPhone 16 Plus with an additional 800 yuan, the iPhone 16 Pro with an additional 1,000 to 1,200 yuan, and the iPhone 16 Pro Max with an additional 1,500 yuan. By the afternoon of September 11, the premium for the iPhone 16 had even fallen to 200 yuan.

Apple's incremental innovations have effectively ended the era of scalpers offering tens of thousands of yuan for new iPhone models. However, at the same time, scalpers were driving up the prices of the Huawei Mate XT Masterpiece to unprecedented heights. Scalper Cao Lei (a pseudonym) has been particularly busy lately, buying and selling Mate XT Masterpieces. "If you have a Mate XT Masterpiece in stock, I can offer you a minimum buyback price of 70,000 yuan," he said. As for how much scalpers can sell these phones for, it varies greatly among them. Some scalpers who frequent business circles in their social media networks are even asking for 188,000 yuan.

Image source: Provided by the interviewee

After the launch event, one scalper managed to acquire 10 units through special channels and sold five of them for 380,000 yuan each on the same day. While 188,000 and 380,000 yuan may seem relatively reasonable prices for scalpers, some are even asking for as much as 650,000 yuan per unit on social media. At this stage, there seems to be no upper limit to the premium being charged for the Mate XT Masterpiece. Scalpers are not worried about finding buyers but rather about sourcing inventory.

Image source: Provided by the interviewee

Image source: Provided by the interviewee

In other words, if a consumer has a Mate XT Masterpiece in stock and sells it to a scalper, they can earn at least 50,000 yuan on top of the nearly 20,000 yuan retail price. Scalpers can make tens of thousands or even hundreds of thousands of yuan from each resale. A single Mate XT Masterpiece can sustain a scalper for three years without needing to make any other sales. This perhaps explains why the number of people rushing to purchase the Mate XT Masterpiece continues to set new records.

During our conversation with Cao Lei, he repeatedly emphasized the importance of ensuring that the Mate XT Masterpieces he sells are not activated on-site, even if he is offered prices in the range of 200,000 to 300,000 yuan. The reason for this caution lies in the ongoing long-term tug-of-war between Huawei and scalpers. It is undeniable that scalpers' pursuit of a particular phone model can send a short-term signal to the market that the model is in high demand. However, scalpers' severe disruption of phone manufacturers' pricing systems and the resulting gray market activities have a severe negative impact on manufacturers' brand image and consumer loyalty. This is especially true for Huawei, whose multiple models are already facing production constraints, which are a bottleneck for its global expansion. The negative impact of scalpers on Huawei is even more severe than on other manufacturers. Based on this, Huawei is employing various methods to combat scalpers. Online, Huawei is working with e-commerce platforms to use big data analysis, intelligent recognition technology, and other techniques to identify and intercept scalper accounts and transactions. Offline, Li Ming revealed that Huawei imposes strict controls on its dealers to prevent gray market activities. When customers purchase Huawei phones, they must activate them on-site, and store employees must take photos using a watermark camera. Huawei conducts periodic spot checks on its stores and imposes penalties or even halts shipments to stores found to be in violation. However, despite these measures, scalpers have found ways to circumvent them.

02

Why are scalpers confident in charging sky-high prices?

In reality, the premium charged by scalpers for a particular phone model is not static but subject to real-time adjustments. Cao Lei explained that factors such as a manufacturer's production capacity for a model, consumer interest in that model, distribution in the end market, and the model's overall cost-effectiveness can all affect scalpers' pricing. Taking Huawei's P70, launched earlier this year, as an example, supply chain reports indicated that Huawei had prepared around 13 to 14 million units of the P70 series for its entire lifecycle. With relatively ample supply, the P70's launch story took an unexpected turn. Scalpers anticipated that due to the severe shortage of the Mate 60, consumers would opt for the P70 as an alternative.

Based on this expectation, many scalpers arrived early at Huawei retail stores to queue up for the P70. At the time, scalpers were offering prices 2,000 yuan above retail on second-hand platforms, and some popular color options were in short supply even among store scalpers. However, within 24 hours of the official launch, consumer interest in the P70 waned as some felt it lacked the overall cost-effectiveness of similarly priced models. Meanwhile, scalpers, experienced in the market, anticipated a potential price drop or promotional strategy for the P70 due to waning consumer demand. To minimize losses, many scalpers not only stopped buying but also began selling their inventory. Today, scalpers' confidence in charging sky-high prices for the Huawei Mate XT Masterpiece stems from their ability to make quick profits by exploiting price differences and market dynamics.

As consumer electronics products become widely available, scalpers generally lower their asking prices or even sell below retail. For instance, scalpers within the industry are projecting prices for the Mate XT Masterpiece at 68,000, 48,000, 40,000, and 30,000 yuan in October, mid-October, November, and December, respectively. However, as the world's first triple-folding screen phone, consumers remain highly enthusiastic about this model in the short term. The limited production capacity of the Mate XT Masterpiece further emboldens scalpers to demand exorbitant prices. A channel partner revealed that Huawei had initially prepared only 100,000 units of the Mate XT Masterpiece. Amid this imbalance between supply and demand, Huawei phones are no longer simply consumer electronics products but have become the equivalent of a "consumer electronics version of Moutai liquor."

As Cao Lei noted, from a supply chain perspective, the production capacity of the Mate XT Masterpiece may be even more constrained than that of the Mate 60. Low hinge yield rates and the after-sales issues and high screen replacement costs associated with creases have long hindered the mainstream adoption of folding screen phones globally. According to data from Trend Force, global shipments of folding screen phones totaled 15.9 million units in 2023, accounting for approximately 1.4% of overall smartphone shipments. DIGITIMES Research predicts that folding screen phone shipments may decline for the first time in 2024, with an estimated annual decline rate of 2.8%. Compared to the double-digit or even multi-fold growth rates of previous years, the enthusiasm for folding smartphones is waning. The Z-shaped hinge design of the Mate XT Masterpiece places high demands on display flexibility, durability, and hinge strength. A relevant research report from Shanxi Securities indicates that the median yield rate for hinges in the industry falls between 50% and 60%, posing a significant hurdle in the assembly process of folding screen panels. The use of a dual-hinge structure for a triple-folding phone panel presents an even greater challenge.

Richard Yu also noted during the Mate XT Masterpiece launch event that the phone employs the "Tiangong Hinge System," the first of its kind to enable both inward and outward folding of the display, posing significant technical challenges. Huawei is also making breakthroughs in folding screen technology. According to intellectual property information from Tianyancha, on September 10, Huawei Technologies Co., Ltd. published a patent for a "foldable display terminal and middle frame," which can be applied to the middle frame of a foldable display terminal and involves the field of display electronics technology. The patent aims to mitigate the mutual compression between middle frames during the fall of a foldable display terminal.

Image source: Huawei launch event

In addition to hinge issues, chip supply may also be a bottleneck. The Mate XT Masterpiece launch event was relatively low-key on the chip front. According to Digitimes, due to TSMC's inability to manufacture chips for Huawei and Huawei's inability to purchase the necessary equipment and components for chip production, Huawei's existing 7-nanometer chips or rumored 5-nanometer chips are produced using DUV lithography machines with multiple exposure techniques. While this solution is effective, it results in lower yield rates and higher equipment wear and tear.

CITIC Construction's related research reports also mention that the three-fold model represents a brand-new folding form, posing significant challenges to the supply chain. Yu Chengdong also candidly stated at the press conference that the cost of the three-fold model is indeed very high, and they will continue to iterate the process, improve yield, and reduce costs.

03

Who is buying the Mate XT Masterpiece?

Who are the people buying the outrageously priced Mate XT Masterpiece, which costs tens of thousands, hundreds of thousands, or even half a million? Based on Cao Lei's experience, there are roughly three types of people purchasing the Mate XT Masterpiece at this stage. Firstly, there are tech and digital review bloggers on online platforms. Since the Mate XT Masterpiece is highly popular and generates its own traffic, reviews related to it can easily garner high likes and comments, helping these bloggers grow their following. Although the Mate XT Masterpiece is relatively expensive, bloggers can resell it after completing video shoots. Unless the blogger dismantles it beyond repair, but how many digital bloggers are willing to bear such high video production costs? Secondly, there are wealthy business owners who do not mind spending money. The appeal of the Huawei brand and support for its technological breakthroughs make many business owners willing to pay the price.

Moreover, being able to acquire the Mate XT Masterpiece in advance can demonstrate their status within their circles. More importantly, the continuous decline in Moutai liquor prices has prompted many business owners to shift their business socializing from Moutai to Huawei's high-end models. The release of the Mate XT Masterpiece coincided with the Mid-Autumn Festival, a peak period for gift-giving among business owners. Thirdly, there are new players in the market, smartphone scalpers, who are gambling on the future price of the Mate XT Masterpiece continuing to rise. Unlike scalpers who speculate on the Mate XT Masterpiece, many consumers are quite cautious about it. Although Yu Chengdong pointed out at the press conference that the Mate XT Masterpiece offers three form factors—single screen, dual screens, and tri-fold—allowing for a large screen viewing experience. Huawei has also equipped the Mate XT Masterpiece with a foldable keyboard, truly making it possible to carry a computer in your pocket.

Image source: Huawei press conference

However, consumer Liu Ming told us that existing traditional large slab phones already meet his daily needs for payment, entertainment, socializing, and office work. Many of the features introduced by phone manufacturers are used infrequently. If one seeks a large screen experience, they can simply purchase a tablet. For gaming or office work, investing in a high-configuration computer is more practical.

Even if one combines a flagship phone, a tablet, and a high-configuration PC, the total cost is unlikely to exceed that of the Mate XT Masterpiece. More importantly, when the screen costs of large foldable and small foldable phones have already reached two or three thousand yuan, the cost of a tri-fold screen will only be higher. In short, I personally believe that the overall value-for-money of the Mate XT Masterpiece is not that high. The supply chain has also pointed out that shipments of the Mate XT Masterpiece may shrink significantly after its initial presale due to the high price affecting consumer willingness. Furthermore, Digitimes reports that the supply chain believes the Mate XT Masterpiece is limited by the Kirin 9010 chip, which is still based on SMIC's N+2 second-generation 7nm process.

In terms of phone performance and power consumption, there is still a gap compared to the iPhone 16 series, which uses TSMC's 3nm-enhanced N3E process. DIGITIMES analyst Lin Jung-chi also noted that the Mate XT Masterpiece is significantly more expensive than the iPhone 16 series and will have a relatively minor impact on the iPhone 16 series in the domestic market. However, the true significance of the Mate XT Masterpiece lies in its potential to serve as a starting point for Huawei to expand its tri-fold product line in the future. This will not only continue to drive Huawei's revenue growth and industry innovation but also continuously demonstrate to the world that China's technological innovation has reached the forefront globally. This value far exceeds that of Huawei's efforts to capture market share from Apple.