Huawei under fire over phone chips as tight supply bites

Sijia Jiang

HONG KONG, April 28 (Reuters) - Chinese smartphone maker

Huawei Technologies has come under fire from users for

"cutting corners", after it said it used a mix of less advanced

and powerful chips in its flagship P10 model due to tight

supplies of the parts.

The company's mobile chief Richard Yu said on April 20 that

Huawei used a mix of less efficient eMMC flash memory cards and

high-performance Universal Flash Storage (UFS) cards in its

latest P10 phone "due to severe shortage in the supply chain."

Yu said user experience shouldn't be impaired because of

product design adjustments, but consumers took to online forums

to counter that speed testing results showed varying

performances.

Huawei has also had a marketing stumble over memory chip

specification in its other high-end Mate 9 model - illustrating

both how a global memory chip shortage is causing problems for

smartphone makers, and the challenges Huawei faces in trying to

overtake Apple Inc with its top-end phones.

Previously, Huawei highlighted the UFS feature as one of the

stand-out specifications in its Mate 9 line, unveiled in

November, saying the chip was 100 percent faster than a typical

eMMC flash.

But, last week, it removed that UFS description from its

official website, without explanation. It also removed from the

Huawei app store a third-party speed-testing software called

Androbench, which it used to tout the P10's performance at its

launch.

That triggered more consumer ire online, with some users

accusing Huawei of selling substandard products for the same

price. Huawei reinstated the description late on Thursday, and

told Reuters it had temporarily removed the description "to

avoid confusion" while it checked to confirm that all Mate 9

phones support UFS 2.1 flash.

"How dare you cut corners on such an expensive flagship!

Conceal the differences at first and then say the differences

don't matter once busted," one user posted on Weibo, China's

popular Twitter-like board.

The Shenzhen Consumer Council said on its official Weibo

account that it received 32 complaints from users on the issue.

"WAKE-UP CALL"

In a letter to Huawei staff on Thursday, later posted on his

Weibo account, Yu said the controversy over the phones' memory

performance was a "wake-up call", and that he had previously

reacted to consumers "in an arrogant way".

UFS boasts a faster performance than a typical flash storage

card, and is crucial for playing the high-resolution games and

media content popular among Chinese device users.

Samsung Electronics Co has used UFS flash memory

cards in its high-end phones, including the Galaxy S8 that went

on sale last week. Apple doesn't reveal what memory card it

uses.

Memory chips are in tight supply due to production

bottlenecks and strong demand from high-end smartphone makers.

Both Samsung and SK Hynix - which together

control nearly half the global NAND flash memory market - warned

this week that the tight supply will continue through this year.

There are also concerns of potential supply disruptions amid

rising tensions with North Korea over its nuclear and missile

programmes.

Any interruptions to their manufacturing operations could

prompt large customers to trigger a contractual term known as an

"allocation", to secure more of their suppliers' limited supply,

industry executives say.

In his staff letter, Yu said Huawei set up a "customer

listening taskforce" that will take a series of actions.

In reply to Reuters queries, the company said no decisions

had yet been made on whether that could involve compensation for

users or a product recall.

Mo Jia, an analyst at consultancy Canalys, said the issue

had been overblown, though Huawei had been overly aggressive in

its marketing.

"It's rare for companies to tout such specific details of

flash memory, which is almost unnoticeable for ordinary users,"

he said, adding supplies of key parts had not kept pace with the

Chinese smartphone market, which grew by around 10 percent in

the first quarter.

(Reporting by Sijia Jiang; Editing by Miyoung Kim and Ian

Geoghegan)