Huawei wanted to be No. 1 in smartphones by 2020. Trump may have ended that dream

  • In a late 2018 interview with CNBC, the head of Huawei’s consumer business, Richard Yu, declared his ambition to make the Chinese technology giant the biggest smartphone maker in the world by 2020.
  • But a series of moves by the Trump administration aimed at restricting Huawei’s access to key technology has hurt the company.
  • Especially damaging has been the inclusion of Huawei on the U.S. Entity List which has meant new smartphone models have not been loaded with licensed Google Android.
  • Huawei is currently the second-largest smartphone maker in the world ahead of Apple and behind Samsung.

Huawei Mate 30 Richard Yu

Huawei laid out its ambition clearly in an interview with CNBC nearly two years ago: It wants to become world’s largest smartphone maker by 2020.

The year is not over — but that goal has not yet materialized, and the path ahead looks bumpy.

Since the head of its consumer business, Richard Yu, laid out his goal for the company in late 2018, the U.S. has upped its pressure on Huawei and threatened to cut off key components and software, a move that could have a big impact on Huawei’s business.

Despite having a relatively younger smartphone division than its closest rivals Samsung and Apple, Huawei has rapidly risen to become the second-largest smartphone player in the world. It still hasn’t managed to overtake Samsung, which sits at the top, as Yu had hoped.

A series of moves by the administration of President Donald Trump has hurt Huawei, according to analysts.

While the firm has managed to hold on to its number two ranking worldwide, it has done so by focusing on China and other emerging markets, while losing share in some critical regions around the world, data provided to CNBC showed. Its global ambitions have been hurt in the process.

Huawei has yet to respond to a request for comment by CNBC.

Google impact

In May last year, Huawei was put on a blacklist in the U.S. known as the Entity List, which restricted American firms’ ability to do business with the Chinese tech giant. Huawei relies heavily on components and software from U.S. companies.

The smartphone-maker has managed to get around some of the component issues, but it is no longer allowed to use the licensed Google Android operating system on its mobile devices.

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Restricting Huawei’s access to Google’s operating system and apps has been the greatest impact felt by the company.

Huawei’s rotating chairman, Eric Xu, told CNBC in March that the company fell short of its own internal revenue target for 2019 by $12 billion with most of that coming from the consumer division, which accounts for over half of the Chinese firm’s total sales.

Data from research firms, International Data Corporation (IDC) and Counterpoint Research, show how the U.S. sanctions have hurt Huawei’s performance globally.

In the first quarter of 2019, before the U.S. blacklisting, Huawei’s global market share stood at 18.9% — standing in second place behind Samsung and ahead of Apple, according to IDC.

But as the effect of the blacklist took hold, Huawei’s market share dipped to 15.2% in the fourth quarter and fell to third place behind Apple.

In the first quarter of 2020, Huawei has regained second place again, but its market share stood at 17.8%, off its peak before the blacklist.

While the global figures appear to show Huawei has remained fairly resilient, they do obscure what is happening in critical international markets. That resilience has come down to Huawei’s efforts to double down on China but also shift large units of older phone models in other emerging markets.

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Article first Appeared on Informalnewz


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