Huawei's shipments could fall by a quarter this year

A Huawei billboard in London. The move by Google and chip designer ARM to cut off supplies and updates to Huawei phones will hit customers in Europe hard as the Chinese company commands nearly 30 per cent of the smartphone market there, according to
A Huawei billboard in London. The move by Google and chip designer ARM to cut off supplies and updates to Huawei phones will hit customers in Europe hard as the Chinese company commands nearly 30 per cent of the smartphone market there, according to industry tracker IDC.PHOTO: NYTIMES
New employees attending a class at Huawei's training facility, in Dongguan, China. The company may have to lay off thousands of people and "disappear as a global player for some time", says an analyst who tracks the chip industry. PHOTO: BLOOMBERG
New employees attending a class at Huawei's training facility, in Dongguan, China. The company may have to lay off thousands of people and "disappear as a global player for some time", says an analyst who tracks the chip industry. PHOTO: BLOOMBERG

Chinese tech firm's smartphones could disappear from global markets, say analysts

SHANGHAI • China's Huawei, hit by crippling US sanctions, could see its shipments decline by as much as a quarter this year, and the company faces the possibility that its smartphones will disappear from international markets, analysts said.

Smartphone shipments at Huawei, the world's second-largest smartphone maker by volume after Samsung, could tumble between 4 per cent and 24 per cent this year if the ban stays put, said Fubon Research and Strategy Analytics.

Several experts said they expect Huawei's shipments to slide over the next six months, but declined to give a hard estimate due to uncertainties surrounding the ban.

The US Commerce Department blocked Huawei from buying American goods two weeks ago. But last Monday, it granted the Chinese tech giant a licence to buy US goods until Aug 19, to maintain existing telecoms networks and provide software updates to Huawei smartphones, a move intended to give telecommunication operators that rely on Huawei time to make other arrangements.

The US ban applies to goods and services with 25 per cent or more of US-originated technology or materials and may, therefore, affect non-American firms. Tech companies including Google and SoftBank Group-owned chip designer ARM have said they will cease supplies and updates to Huawei.

"Huawei may be wiped out of the Western European smartphone market next year if it loses access to Google," said Ms Linda Sui, director of wireless smartphone strategies at Strategy Analytics.

She predicts Huawei handset shipments will decline another 23 per cent next year, but believes the company could survive on the sheer size of the China market.

 
 
 
 

Fubon Research, which previously forecast Huawei would ship 258 million smartphones this year, now expects it to ship just 200 million in a worst-case scenario.

Huawei commands nearly 30 per cent of the European market, according to industry tracker IDC, and shipped 208 million phones last year, including half to markets outside China. The company counts Europe as the most important market for its premium smartphones.

European customers will be hit harder than those in the United States or China. Huawei phones are largely unavailable in the US, and Google's services have long been blocked in China by the government.

But they are best-sellers in countries such as Greece, Portugal and Spain. Those phones, plus robust sales of telecommunications equipment, have made the market covering Europe, the Middle East and Africa into Huawei's second biggest after China. It accounted for 28 per cent of Huawei's revenue last year, compared with 7 per cent from the Americas.

Huawei has said it has been developing the technology it needs to be self-sufficient for years. But experts are not buying the company's claim. They said key components and intellectual property needed in Huawei's devices are not available outside the US.

Huawei would potentially need to lay off thousands of people and "disappear as a global player for some time", said Mr Stewart Randall, who tracks the chip industry from the Shanghai-based consultancy Intralink.

"Over the last four days, Huawei handsets have slumped in popularity - receiving almost half as many clicks as they did last week in the UK and 26 per cent less on the global stage," according to PriceSpy, a product comparison site which has an average of 14 million visitors a month.

The export ban on Huawei could also delay China's 5G rollout, Jefferies analyst Edison Lee said. Huawei has said it signed 5G contracts with 40 clients around the world.

SEE INSIGHT: 

China won't give in to an unequal deal

US swinging to demonisation?

 
A version of this article appeared in the print edition of The Sunday Times on May 26, 2019, with the headline 'Huawei's shipments could fall by a quarter this year'. Print Edition | Subscribe