Back in 2015, the head of Huawei’s consumer products unit, Richard Yu, made a bold forecast
. He said that in two to three years, Huawei would surpass Apple to become the second largest smartphone manufacturer in the world. He added that in five years, Huawei would top Samsung to become the world’s largest producer of smartphones. And sure enough, that is basically what happened. Huawei passed Apple and last year it finished second to Samsung. Earlier during the second quarter of this year, Huawei outshipped Samsung
and for a brief period of time it was the top smartphone manufacturer on the planet.
Huawei could see its smartphone shipments decline by 73% this year
Despite meeting its goals for a short period of time, the long term outlook for the phone and networking equipment manufacturer is not good. That’s because the U.S., considering Huawei
to be a national security threat, has made doing business difficult for the company. Last year, it placed Huawei on the Entity List preventing it from accessing its U.S. supply chain without permission from the Commerce Department. As a result, heavyweights like Micron and Google have stopped supplying memory chips and software to Huawei respectively.
The current Huawei flagship model is the Mate 40 line
And the Trump administration aimed right at Huawei’s achilles heel this year by adding new export rules that prevent foundries using American sourced technology from shipping chips to Huawei, The latter can’t even take delivery of cutting-edge
chips that it designed itself. The U.S. actions against Huawei led it to sell its sub-brand Honor division for $15 billion. And even if President-elect Joe Biden, when he takes office in two-weeks, were to remove all sanctions against Huawei, the company will still see a sharp drop in shipments. Part of that will be due to Honor becoming a rival of Huawei instead of a sub-brand. Research firms IDC and Strategy Analytics estimated that in the first half of last year, Honor made up 28% and 38% of Huawei’s shipments respectively.
So what is expected from Huawei this year? According to research firm TrendForce, Huawei will drop from its third place finish last year to seventh place this year. That is a rather large fall for a company that has been considered one of the top smartphone manufacturers in the world. In 2018, Huawei delivered 208 million handsets. In 2020 that figure declined to 170 million and a further decline to 45 million is forecast for this year; that is a 73.5% decline for this year. The decline will also result in Huawei losing much of its share of the 5G market from 30% last year to 8% this year, also a 73.3% decline.
TrendForce says that global smartphone shipments will rise 9% this year to 1.36 billion units, an anemic rebound from the 11% decline in smartphone production last year. The top six smartphone manufacturers this year could be, in order, Samsung, Apple, Xiaomi, Oppo, Vivo and Transsion. These six brands will make up 80% of global smartphone shipments this year. Transsion is a phone manufacturer based in Shenzhen, China and is popular in Africa. The researchers also say that the number of 5G phones produced will rise this year to 500 million units from the 240 million made in 2020. Chinese brands could make up as much as 60% of 5G phones produced in 2021.
Huawei recently released its new Mate 40 flagship series and early next quarter we could see the unveiling of the photography based P50 line. This year, Huawei could finish seventh with Honor right behind at number eight. Besides its one-time standing as a top global smartphone producer, the company is also the world’s top networking equipment manufacturer.
The U.S. considers Huawei to be a national security threat because of its alleged ties to the Communist Chinese government.