Huawei shipments seen tumbling if US curbs stay

May 27, 2019 09:30
If Huawei is unable to resolve the issue of US sanctions and resume normal ties with suppliers and partners quickly, the firm's smartphone business will take a major hit. Photo: Reuters

Huawei Technologies could see its smartphone shipments fall by as much as a quarter this year in the wake of US sanctions on the Chinese telecom equipment firm, according to some analysts.

Shipments could tumble anywhere between 4 percent and 24 percent in 2019 if Washington's curbs are prolonged, analysts at Fubon Research and Strategy Analytics said, Reuters reports.

The US Commerce Department blocked Huawei from buying US goods last week amid an escalating trade spat with China.

The ban applies to goods and services with 25 percent or more of US-originated technology or materials, and may, therefore, affect non-American firms.

Tech companies including Google and chip designer ARM have said they will cease supplies and updates to Huawei.

Amid the US sanctions, there is a possibility that Huawei's smartphones may disappear from some international markets, analysts said.

“Huawei may be wiped out of the Western European smartphone market next year if it loses access to Google,” Reuters quoted Linda Sui, director of wireless smartphone strategies at Strategy Analytics, as saying.

She predicts Huawei handset shipments will decline another 23 percent 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 in 2019, now expects the company to ship just 200 million in a worst-case scenario.

Huawei, the world’s second-largest smartphone maker by volume, commands nearly 30 percent of the European market, according to industry tracker IDC.

The company shipped 208 million phones last year, including half to markets outside China. Huawei counts Europe as the most important market for its premium smartphones.

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 United States.

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

Potential buyers of Huawei’s phones are likely to switch to high-end devices from Samsung and Apple, and also buy mid-end phones from domestic rivals OPPO and Vivo, analysts said.

In related news, Huawei's founder and CEO Ren Zhengfei told Bloomberg that retaliation by Beijing against Apple was unlikely and that he would oppose any such move from China against the iPhone maker.

When asked about calls from some in China to retaliate against Apple, Ren said that he would “protest” against any such step if it were to be taken by Beijing.

“That (Chinese retaliation against Apple) will not happen first of all and second of all, if that happens, I’ll be the first to protest,” Ren said in the interview with Bloomberg.

He conceded that export curbs from the Trump administration will cut into a two-year lead built by Huawei over its competitors, but added that the company will either ramp up its chip supply or find alternatives to stay ahead in smartphones and 5G.

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