Are Chinese smartphone makers using low quality chip sets? Is that why their prices are cheaper?

No, low quality chipset is not the reason why Chinese smartphones are so cheap.

Below are the 2016 top chipset suppliers & their market share for Android devices. They are all quality suppliers.

[li]Qualcomm (USA ) 57% - high tier, high price[/li][li]MediaTek (Taiwan) 20% - mid-low tier, aggressive price[/li][li]Samsung (S. Korea) 12% - high tier; mostly for internal consumption[/li][li]HiSilicon, a Huawei subsidiary (China) 6% - high/mid; mostly for internal consumption[/li][li]Other 4%[/li][/ol]
MediaTek dominates in the chipset for mid-low tier smartphones; and they didn’t garner 20% of the market by producing junk. And while they have aggressive pricing, this is not the primary reason why smartphones nowadays are so cheap. Instead, here are the factors why Chinese smartphones are so cheap to produce.

[li]Highly integrated chipsets - Even low-tier chips have a high level of integration (video/graphics, audio, power mgmt, RF, etc.) Unlike in the old days, phone manufactures don’t have to do all these design/engineering integrations. That’s a lot of NRE avoided.[/li][li]Cheap components - The Chinese electronics component industry is very competitive.[/li][li]Cheap technical talent - The average annual salary for a Chinese college grad is US$6,000. So, cost for engineers (electrical, mechanical, tooling, production, quality control, etc) are a fraction of what it would cost in other countries; and they are in ample supply. For comparison, an experienced tooling engineer in the US will run about $100K.[/li][li]Less marketing - Most Chinese companies still haven’t invested big dollars on marketing and in building their brand.[/li][li]Competition - Due to the high level of chipset integration, the entry barrier to building an Android phone is not that high. There are over a 100 smartphone manufacturers/brands in China. This amount of competition keeps the pricing/margin low.[/li][/ol]
You may be wondering why I didn’t list labor. That’s because in electronic manufacturing, less than 8% of the product cost is assembly (and I’m being quite generous…)

So unless you have a powerful brand and key product differentiation (i.e. Samsung, Apple, Huawei), a manufacture will not break into the upper-mid or high tier phone segment. Instead, you’ll be fighting with the other 100+ players who can produce and sell a smartphone for under $25… It’s a brutal industry.

I am an iPhone guy tangu iPhone 4, I cannot relate

if it talks, if it texts, if it allows me to Ktalk…what is inside doesn’t bother noobs like me…

The John Michuki concept there! Hehehe!


@kooliba doesn’t like this…

High integration makes things cheap, slow, fragile, compact, and jiko.

The chinese companies just put a low margin on their phones since they cant compete by setting the price high when we have heavyweights like apple and samsung. Actually i realised phones from these established companies have crazy mark ups…eg an iphone priced at $750 only costs like $240 to make, same as samsung et al

Sony walipunguza margin ndo wasurvive. They have the cheapest of the top tier. They start a new flagship at 50k or 60k and in a short while its down to 30 and its still the same old flagship smartphone. Current two sony flagship variants are 34k and 39k at the retailer.

iPhone is worth the money

you are not just paying for the cost of hardware but software; updates+patches, warranty

@Deorro ume lost hizi streets …ndume gani huyo amekuwa akikufuga?

Eeeehh, sema tu

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Come Beirut

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You have a small dick

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jina itakuja Yule Karis Bwege?

wewe hupasuliwa mcuundu na ma 9incher plus?

You are an admin; you cannot expose me