The Magic V5’s thinness is made possible by innovations in its silicon-carbon battery, which stacks cells just 0.2 millimeters thick to create a battery that’s as thin as a bank card. The new phone is also light: At just 217 grams, the Magic V5 weighs less than the iPhone 16 Pro Max.

Behind these innovations is a “massive” amount of research and development, Hope Cao, Honor’s product expert on foldables, told Fortune ahead of the Magic V5 launch.

Honor invested 1 billion Chinese yuan ($139 million) into researching its silicon-carbon battery technology. The company dedicates over 10% of its total revenue to R&D each year.

“In terms of materials, structure, craftsmanship … everything is extremely costly from an R&D perspective,” Cao said. 

Foldables represent a small but rapidly expanding segment of the Chinese smartphone market. Sales in this category grew by 27% last year, according to Counterpoint Research. Book-type foldables, which open along the longer edge to create a larger screen, are particularly popular.

Cao suggests this aligns with Chinese consumers’ preference for versatile devices for both work and entertainment. A larger screen means more space for productivity apps, meaning users can do their work on a foldable smartphone rather than a laptop. The rise of “short dramas”—soap operas designed to be watched on a phone and easily shared on social media—are also pushing shoppers to invest in larger displays.

Honor was once Huawei’s budget smartphone division. U.S. sanctions forced the Chinese tech giant to offload the company in late 2020. The company had a 13% share of China’s smartphone market in the first quarter of 2025, according to Counterpoint, close behind Vivo, Oppo, and Apple. 

China’s budget brands are now venturing into the premium market, seeking growth from selling higher-value phones, rather than a larger volume of cheaper models.

Still, the return of Huawei to the smartphone market in 2023 is weighing on Honor’s business. Counterpoint Research puts Huawei in first place in China’s smartphone market, alongside Xiaomi. 

Huawei’s success is also weighing on Apple, whose iPhone once dominated the Chinese market. Local smartphones now offer designs and features that Apple’s tried-and-true iPhone is struggling to match. Apple plans to release a book-style foldable phone in 2026, The Information reported last year. 

The iPhone maker is also struggling to launch its AI services in China. Earlier this year, Alibaba announced that it was going to be Apple’s local partner to offer Apple Intelligence to users. Yet the deal has reportedly drawn scrutiny in both Washington and Beijing. 

AI is quickly becoming a key differentiator for Chinese smartphones, including those designed by Honor. The Chinese company is experimenting with on-device AI, or services that run on the phone as opposed to the cloud. Honor plans to invest $10 billion over the next five years to develop AI for its product lineup, which it hopes to expand to include PCs, tablets, and wearables.