In brief: After coming close to overtaking Samsung as the world’s biggest smartphone vendor at one point, Huawei is now coming to terms with a new reality. With a dwindling supply of chips and no sign of improving US-China trade relations, it won’t be able to sell nearly as many smartphones this year.
Huawei is stuck between a rock and a hard place as US sanctions have resulted in a significant reduction in global sales of its smartphones throughout 2020. In fact, it’s become so hard for the Chinese company to manage the financial impact, that it not only divested in one of its popular sub-brands, but is now turning to pig farming as a way to soften the fall.
However, the company isn’t giving up on its smartphone business, which is still thriving in Asian and European markets. According to a Nikkei report, Huawei has told its suppliers that it expects to sell 60 percent fewer phones this year, adjusting its orders to reflect that expectation.
Some suppliers have been told by Huawei that its sales target is around 70 to 80 million smartphones for 2021. Compare that with the 189 million phones that the company shipped in 2020 and the 240 million units it shipped in 2019, and you can clearly see that Huawei’s optimism at the start of the US-China trade war is fading in the face of a new reality.
Furthermore, Huawei will have to dig deep into its remaining stockpile of chips that it built when it still had access to TSMC’s foundry. That is projected to get the company through this year, but will limit many of the company’s phones to 4G connectivity, as it can no longer import 5G modems due to US sanctions.
In the meantime, Huawei is hoping the Biden administration will reverse some of these sanctions, and will continue to invest in its Huawei Mobile Services while growing its range of AI and cloud services. Earlier this month, Huawei CEO Ren Zhengfei said during the inauguration of Intelligent Mining Innovation Lab in Taiyuan that the company is open to “transferring all of our 5G technologies, not just licensing production to others. This will include source programs and source code to all the hardware design secrets as well as the know-how and the chip design.”
The United States, Australia, United Kingdom, and some countries in Europe are actively removing Huawei’s network equipment from their infrastructure due to security concerns, so it’s not clear if they would even consider the company’s proposal to examine the underlying technology under a microscope. On the other hand, making a carbon copy of Android 10 will likely attract even more sanctions, and Qualcomm is more than happy to fill in the market gap left by Huawei’s gradual decline.