How Luckin Coffee overtook Starbucks as the largest coffee chain in China

Published

2 years ago

September 12, 2023

admin

SHENZHEN, CHINA – 2020/10/05: Chinese coffee shop chain Luckin Coffee logo seen at a store. (Photo by Alex Tai/SOPA Images/LightRocket via Getty Images)

Sopa Images | Lightrocket | Getty Images

Chinese coffee giant Luckin Coffee hit 10,000 stores in China in June, surpassing Starbucks as the largest coffee chain brand in the country following rapid nationwide expansion this year.

Founded in 2017, Luckin Coffee burst onto the Chinese coffee scene to challenge Starbucks through affordable coffee options and mobile ordering. China is Starbucks’ second-largest market after the U.S.

Luckin Coffee grew to 10,829 stores in China at the end of June, surpassing Starbucks as the largest coffee chain brand in the country following what one analyst calls an “aggressive” expansion. In comparison, Starbucks operated 6,480 stores in mainland China at the end of the second quarter.

“They are very aggressive in store expansion and in China, it is very common to buy a drink from Luckin for $2 or less after heavy discounts,” said Jianggan Li, founder and CEO of tech research company Momentum Works.

Luckin stores are also of a smaller format compared to Starbucks, which has much larger stores.

Rahul Maheshwari

Early-stage investor

China is traditionally a tea-drinking market, but over the last few years, coffee sales have been increasing steadily, especially in urban areas and among younger professionals.

China’s overall coffee sales will rise at an 8.7% compound annual growth rate (CAGR) from 2022–2027, according to analytics firm GlobalData. CAGR is a measure of investment returns, which takes into account what an investment yields at an annual rate over a specified period.

Aggressive expansion

In the quarter ended June 30, Luckin Coffee opened 1,485 new stores, averaging 16.5 new stores daily. Of the 10,829 stores in China, 7,181 are self-operated and 3,648 are partnership stores, according to the company’s earnings transcript.

The Chinese coffee chain expanded to Singapore in March in its first international foray and has opened 14 stores in the city-state so far, according to a CNBC check.

Cumulative transacting customers surpassed 170 million, while average monthly transacting customers reached 43.07 million in the second quarter, according to the company.

“Luckin was able to expand so fast because of its operating model — which includes self-operated stores and franchises,” said Li of Momentum Works.

Meanwhile, Starbucks’ stores worldwide are company-owned and the American coffee chain does not franchise operations, according to its website. Instead, it sells licenses to operate. In the quarter ended July 2, the company opened 588 new stores — about 40% of Luckin’s count.

Vivian Leung, an office worker residing in Guangzhou, said that there are at least two Luckin Coffee outlets within 50 meters from her apartment.

TIANJIN, CHINA – 2023/07/24: Customers are waiting in front of the counter.

Zhang Peng | Lightrocket | Getty Images

“Franchising unlocks very fast growth because you don’t have to put that amount of capital. Otherwise you will always be limited from growth. The density of Luckin stores is so high where there’s a store in almost every neighborhood,” said Rahul Maheshwari, an early-stage investor in Asia. He previously worked in Beijing at a Chinese venture capital firm and as a general manager with a Chinese app.

Luckin found mass market appeal. Price wise, it is already differentiated from Starbucks. Quantity wise, it’s still better, compared to many of the low end brands, said Li of Momentum Works.

“Luckin stores are also of a smaller format compared to Starbucks, which has much larger stores,” said Maheshwari.

Luckin found mass market appeal. Price wise, it is already differentiated from Starbucks. Quantity wise, it’s still better, compared to many of the low end brands.

Jianggan Li

Founder and CEO at Momentum Works

“As you can imagine, the asset-heavy model is expensive to operate and slow to scale,” said Momentum Works in a report.

Luckin operates a grab-and-go model, where customers order from the app and pick up their orders at the store, unlike Starbucks which offers a cozy environment for people to work and socialize.

As a result, Luckin has lower operating costs and can “break even within a year,” said Maheshwari.

Mass market appeal

Luckin and Starbucks have different pricing strategies.

A cup of coffee from Luckin costs 10 to 20 yuan, or about $1.40 to $2.75. That’s because Luckin offers heavy discounts and offers. Meanwhile, a cup of coffee from Starbucks is priced at 30 yuan or more — that’s at least $4.10.

“Luckin found mass market appeal. Price wise, it is already differentiated from Starbucks. Quality wise, it’s still better, compared to many of the low end brands,” said Li.

According to Guangzhou resident Leung, said that Luckin Coffee is “delicious and affordable.”

Luckin is also looking to collaboration and partnerships to raise the profile of its brand.

Last Tuesday, the company launched a new drink with Kweichow Moutai, a Chinese liquor maker famed for its “baijiu,” or white liquor made from rice grains.

The Chinese coffee chain said that it sold 5.42 million Moutai alcohol-infused lattes on the first day of its launch.

Moutai, sometimes called maotai, is a premium distilled Chinese liquor and has been dubbed the “national liquor of China.”

Moutai topped the list of spirits brands with a value of $42.9 billion, according to a 2022 study by valuation consultancy Brand Finance.

Shawn Yang, managing director at Blue Lotus Research Institute, said it was a strategic move to “offer premium products to offset the sense of cheapness from 9.9 yuan per cup.”

“Luckin [extended its] customer base by leveraging the influence of legacy Chinese brands, including Moutai and Coconut Palm,” said Yang in a report.

Other localized hits with the Chinese market include brown sugar boba latte, as well as cheese latte and coconut latte.

“Luckin Coffee has played an important role in deepening the coffee market in China by introducing products which would suit the Chinese customer,” said Maheshwari in a recent blog post.

Making a comeback?

Technology

A ‘seismic’ Nvidia shift, AI chip shortages and how it’s threatening to hike gadget prices

Published

4 hours ago

December 2, 2025

admin

A 'seismic' Nvidia shift, AI chip shortages and how it's threatening to hike gadget prices

The logo of an Apple Store is seen reflected on the glass exterior of a Samsung flagship store in Shanghai, China Monday, Oct. 20, 2025.

Wang Gang | Feature China | Future Publishing | Getty Images

The cost of your smartphone might rise, analysts are warning, as the AI boom clogs up supply chains and a recent change by Nvidia to its products could make it worse.

AI data centers, on which tech giants globally are spending hundreds of billions of dollars, require chips from suppliers, like Nvidia, which relies on many different components and companies to create its coveted graphics processing units.

But other companies like AMD, the hyperscalers like Google and Microsoft, and other component suppliers all rely on this supply chain.

Many parts of the supply chain can’t keep up with demand, and it’s slowing down components that are critical for some of the world’s most popular consumer electronics. Those components are seeing huge spikes in prices, threatening price rises for the end product and could even lead to shortages of some devices.

“We see the rapid increase in demand for AI in data centers driving bottlenecks in many areas,” Peter Hanbury, partner in the technology practice at Bain & Company, told CNBC.

Where is the supply chain clogged?

One of the starkest assessments came from Alibaba CEO Eddie Wu, CEO of Chinese tech giant Alibaba.

Wu, whose company is building its own AI infrastructure and designs its own chips, said last week that there are shortages across semiconductor manufacturers, memory chips and storage devices like hard drives.

“There is a situation of undersupply,” Wu said, adding that the “supply side is going to be a relatively large bottleneck.” He added this could last two to three years.

Bain and Co.’s Hanbury said there are shortages of hard disk drives, or HDDs, which store data. HDDs are used in the data center. These are preferred by hyperscalers,: big companies like Microsoft and Google. But, with HDDs at capacity, these firms have shifted to using solid-state drives, or SSDs, another type of storage device.

However, these SSDs are key components for consumer electronics.

The other big focus is on a type of chip under the umbrella of memory called dynamic random-access memory or DRAM. Nvidia’s chips use high-bandwidth memory which is a type of chip that stacks multiple DRAM semiconductors.

The winners and losers from the surge in memory chip prices

Memory prices have surged as a result of the huge demand and lack of supply. Counterpoint Research said it expects memory prices to rise 30% in the fourth quarter of this year and another 20% in early 2026. Even small imbalances in supply and demand can have major knock on effects on memory pricing. And because of the demand for HBM and GPUs, chipmakers are prioritizing these over other types of semiconductors.

“DRAM is certainly a bottleneck as AI investments continue to feed the imbalance between demand and supply with HBM for AI being prioritized by chipmakers,” MS Hwang, research director at Counterpoint Research, told CNBC.

“Imbalances of 1-2% can trigger sharp price increases and we’re seeing that figure hitting 3% levels at the moment – this is very significant.”

Why are there issues?

Building up capacity in various areas of the semiconductor supply chain can be capital-intensive. And it’s an industry that’s known to be risk-averse and did not add the capacity necessary to meet the projections provided by key industry players, Bain & Co.’s Hanbur said.

“The direct cause of the shortage is the rapid increase in demand for data center chips,” Hanbury said.

“Basically, the suppliers worried the market was too optimistic and they did not want to overbuild very expensive capacity so they did not build to the estimates provided by their customers. Now, the suppliers need to add capacity quickly but as we know, it takes 2-3 years to add semiconductor manufacturing fabs.”

Nvidia at the center

A lot of attention is on Nvidia given it dominates when it comes to the chips that are being put into AI data centers.

It is a huge customer of high bandwidth memory, for example. And its products are manufactured by TSMC which also has other major customers like Apple.

But analysts are focused on a change Nvidia has made to its products that has the potential to add major pressure to consumer electronics supply chains. The U.S. giant is increasingly shifting toward using a type of memory in its products called Low-Power Double Data Rate (LPDDR). This is seen as more power efficient than the previous Double Data Rate, or DDR memory.

The problem is, Nvidia is increasingly using the latest generation of LPDDR memory, which is also used by high-end consumer electronics makers such as Samsung and Apple.

Typically, the industry would just be dealing with demand for this product from a handful of big electronics players. But now Nvidia, which has huge scale, is entering the mix.

“We also see a bigger risk on the horizon is with advanced memory as Nvidia’s recent pivot to LPDDR means they’re a customer on the scale of a major smartphone maker — a seismic shift for the supply chain which can’t easily absorb this scale of demand,” Hwang from Counterpoint Research said.

How AI boom is impacting consumer electronics

Here’s the link between all of this.

From chip manufacturers like TSMC, Intel and Samsung, there is only so much capacity. If there is huge demand for certain types of chips, then these companies will prioritize those, especially from their larger customers. That can lead to shortages of other types of semiconductors elsewhere.

Memory chips, in particular DRAM which has seen prices shoot up, is of particular concern because it’s used in so many devices from smartphones to laptops. And this could lead to price rises in the world’s favorite electronics.

DRAM and storage represent around 10% to 25% of the bill of materials for a typical PC or smartphone, according to Hanbury of Bain & Co. A price increase of 20% to 30% in these components would increase the total bill of materials costs by 5% to 10%.

“In terms of timing, the impact will likely start shortly as component costs are already increasing and likely accelerate into next year,” Hanbury said.

Memory chip prices, earnings growth to support South Korea market: Morgan Stanley

On top of this, there is now demand from players involved in AI data centers like Nvidia, for components that would have typically been used for consumer devices such as LPDDR which adds more demand to a supply constrained market.

If electronics firms can’t get their hands on the components needed for their devices because they’re in short supply or going toward AI data centers, then there could be shortages of the world’s most popular gadgets.

“Beyond the rise in cost there’s a second issue and that’s the inability to secure enough components, which constrains the production of electronic devices,” Counterpoint Research’s Hwang said.

What are tech firms saying?

A number of electronics companies have warned about the impact they are seeing from all of this.

Xiaomi, the third-biggest smartphone vendor globally, said it expects that consumers will see “a sizeable rise in product retail prices,” according to a Reuters reported this month.

Jeff Clark, chief operating officer at Dell, this month said the price rises of components is “unprecedented.”

“We have not seen costs move at the rate that we’ve seen,” Clark said on an earnings call, adding that the pressure is seen across various types of memory chips and storage hard drives.

The unintended consequences

The AI infrastructure players are using similar chips to those being used in consumer electronics. These are often some of the more advanced semiconductors on the market.

But there are legacy chips which are manufactured by the same companies that the AI market is relying on. As these manufacturers shift attention to serving their AI customers, there could be unintended consequences for other industries.

“For example, many other markets depend on the same underlying semiconductor manufacturing capabilities as the data center market” including automobiles, industrials and aerospace and defense, which “will likely see some impact from these price increases as well,” Hanbury said.

Technology

Samsung launches its first multi-folding phone as competition from Chinese brands intensifies

Published

5 hours ago

December 2, 2025

admin

Samsung launches its first multi-folding phone as competition from Chinese brands intensifies

Samsung Electronics’s Galaxy Z TriFold media day at Samsung Gangnam in Seoul, South Korea, on Dec. 2, 2025.

Anadolu | Anadolu | Getty Images

Samsung Electronics on Monday announced the launch of its first multi-folding smartphone as it races to keep pace with innovations from fast-moving rivals.

The long-anticipated “Galaxy Z TriFold” will go on sale in South Korea on Dec. 12, with launches to follow in other markets including China, Taiwan, Singapore, and the United Arab Emirates, the company said in a press release.

The phone will be available in the U.S. during the first quarter of 2026, with more details to be shared later, the South Korean tech giant added. The Galaxy Z Trifold will ship as a single model in black with 16GB of memory and 512GB of storage, priced at 3,594,000 South Korean won ($2,449).

With Apple’s expected entry into the foldable segment, Samsung is positioning this device as a multi-fold pilot to reinforce its technology leadership.”

Liz Lee

Associate Director at Counterpoint Research

The device uses two inward-folding hinges to open into a 10-inch display — a tad smaller than the 11th-generation iPad’s 11-inch display — with a 2160 x 1584 resolution.

When its screen panels are folded, the device is measures 12.9 millimeters (0.5 inches) thick — slightly more than the Galaxy Z Fold6 at 12.1 mm and the latest Galaxy Z Fold7 at 8.9 mm.

“Samsung’s first tri-fold model will ship in very limited volume, but scale is not the objective,” Liz Lee, associate director at Counterpoint Research, said in a statement shared with CNBC.

“With competitive dynamics set to shift materially in 2026, especially with Apple’s expected entry into the foldable segment, Samsung is positioning this device as a multi-fold pilot to reinforce its technology leadership.”

A Samsung Electronics Co. Galaxy Z TriFold smartphone on display during a media preview in Seoul, South Korea, on Tuesday, Dec. 2, 2025.

Bloomberg | Bloomberg | Getty Images

Lee added that Samsung’s latest product is meant to test durability, hinge design and software performance while gathering real-world user insights before wider commercialization.

The phone’s three foldable panels can also run three apps vertically side by side, and offer a desktop-like mode without a separate display.

The TriFold features Samsung’s largest battery capacity among its foldable models and supports super-fast charging that reaches 50% in 30 minutes.

TM Roh, who was recently appointed Samsung Electronics co-CEO and head of the Device eXperience division, said the Galaxy Z TriFold reflects years of work on foldable designs and aims to balance portability, performance and productivity in one device.

Samsung was an early innovator of folding smartphones, unveiling its first foldable device in 2019. While the market has remained relatively small, new competitors have continued to enter, including Chinese brands that have proven competitive in both price and dimension.

Visitors try out the Galaxy Z Trifold during Samsung Electronics’ Galaxy Z TriFold media day at Samsung Gangnam in Seoul, South Korea, on Dec. 2, 2025.

Anadolu | Anadolu | Getty Images

In September, telecommunications giant Huawei announced its second-generation trifold phone for the Chinese market, measuring 12.8 mm thick when folded.

This year has also seen Chinese brands like Honor launch foldable smartphones in international markets. Honor was spun off from Huawei in 2020 in a bid to avoid U.S. sanctions and tap international markets.

Like Samsung’s other recent foldables, the TriFold is rated IP48, meaning it is water-resistant up to 1.5 meters for up to 30 minutes but offers limited dust protection.