Chinese closing gap in hardware

Visitors crowd Chinese company Huawei’s booth at Mobile World Congress in Barcelona, Spain, yesterday. Roughly 1,400 companies including Samsung Electronics, LG Electronics and other global IT companies, such as Microsoft and Google, are participating. [NEWSIS]

BARCELONA, Spain - Chinese handset makers are sending a message of intent to market leaders by flashing their hardware prowess at Mobile World Congress, which is running until Thursday in Barcelona, Spain.

This means more work for Samsung Electronics and LG Electronics, which until now have focused more on staying in step with Western rivals like Apple and Nokia. Now they also need to keep tabs on Chinese handset makers, who are catching up fast.

Chinese telecom giant Huawei set up a booth next to Samsung and LG and unveiled two quad-core phones. These come with four application processors and are seen as the next big thing in the world of smartphones.

Four companies are showcasing quad-core phones at this year’s MWC, the world’s largest telecom fair that kicked off its four-day run on Monday. They are LG Electronics, China’s Huawei and ZTE, and Taiwan’s HTC.

What has surprised many market watchers here is how Huawei’s quad-core phones run on its own processor chipsets. Samsung Electronics is the only global handset maker that makes its own chipsets, and most others use those manufactured by Qualcomm, Nvidia or Texas Instruments.

“In terms of hardware, they have pretty much caught up [with us],” said an LG executive. “When a company makes its own chipsets, it naturally starts to think about how it can maximize performance while using as little battery as possible. When Chinese chipsets reach a satisfactory level, the country will emerge as a powerful manufacturer in this sector.”

A Samsung official agreed. “Chinese handset makers have improved their ability to absorb the strengths of the products of other companies. They have also shortened the time between product planning and product launch,” he said. “This is certainly a sign that Chinese companies could soon be a threat to us.”

Samsung decided not to reveal its third-generation Galaxy S smartphone at this year’s MWC due to fears it could give Chinese handset makers an advantage, insiders say.

Samsung showcased its Galaxy S II smartphone at last year’s event, and launched it commercially three months later. Chinese companies are believed to have taken cues from the device, and they subsequently made strides in developing their own gadgets.

To avoid a repeat this time round, Samsung plans on revealing the latest Galaxy S smartphone at the same time that it drops it on the market.

“Chinese handset makers tend to launch similar devices [to us] before we release ours,” Samsung Electronics Chairman Choi Gee-sung told reporters yesterday.

Still, most industry observers here agreed that China has more catching up to do in terms of software, user interface and design, all of which are critical elements needed to roll out world-class, cutting-edge products.

Some critics have remarked on how the PF112 smartphone, one of eight that ZTE is promoting at the convention, closely resembles the Galaxy Nexus, which Samsung Electronics and Google have jointly developed.

“Now, Chinese companies are totally relying on Google’s Android software, but once they finish catching up in terms of hardware, they will rapidly close the software gap,” said an official at LG Electronics.

By Park Tae-hee, Kim Hyung-eun [hkim@joongang.co.kr]