Huawei Expects To Grow Smartphone Sales By 20% In 2020 – Defying US Clampdown
The US government's decision to add Huawei to an entity list barred the company from conducting business with its American suppliers without the suppliers obtaining a permit from the US government. Companies including Google, who is behind the Android operating system powering Huawei's gadgets were limited to providing only after-sales support to the company.
Huawei responded by sharing details on its in-house operating system dubbed Harmony and stating that it had built stockpiles of US-sourced components to stop its operations from being disrupted. Now, the company's management is optimistic that Huawei can maintain its strong sales growth despite six months after a souring of relations with the US. Take a look below for more details.
Huawei Believes Its Smartphone Shipments Will Grow By 20% In 2020 Despite Tensions With US
The diverse nature of global supply chains has let Huawei manage the repercussions of being placed on the American entity list. In an interview given to Bloomberg, the company's president of corporate strategy Will Zhang and its founder Ren Zhengfei both believe that Huawei will maintain a 20% growth rate in smartphone shipments next year.
While Huawei will have trouble selling its devices in the US and even globally due to being unable to source software from Google, the company can, and it will rely on its home country China. In China, Huawei will also be helped by 5G, as Chinese carriers commenced selling the advanced cellular network to customers last week. Huawei's first 5G smartphone, the Mate 20X, was announced in May this year.
Owing to tensions with the United States, Mr. Zhang has outlined three possible scenarios for Huawei's smartphone shipments. The optimistic scenario projects a 40% growth in smartphone shipments next year, the moderate projects a 20% growth and the pessimistic scenario has a ''small' growth.
Huawei Believes US Tensions To Affect Server Business By $4 Billion
Huawei shipped 41.5 million smartphones in China in Q3 2019, up 66% from the 25 million devices it shipped in 2018's third quarter. Globally, the company shipped 66.8 million devices in the third quarter, up from the 51.9 million devices it shipped last year. While Huawei remains China's top smartphone company in terms of shipments, the company comes second place to Korean tech giant Samsung globally. Samsung shipped 78.9 million devices in the previous quarter, up from 71.3 million smartphones it shipped in the same quarter a year back.
While Huawei can source most of its smartphone components globally, the company still needs to have Google on board if it's to continue operating profitably in markets outside China. To that end, recent reports of a thaw in trade tensions between China and the United State will help Huawei, as they will make it easier for the company to obtain permits from the US government. The big impact of the sanctions though, one which will prove difficult, if not impossible to navigate around, will be to Huawei's server business.
As Mr. Zhang explained, while the company's server business was expected to generate $8 billion in revenue this year, now this amount has been cut in half. This is due to the fact that Huawei relies on processors from Intel and AMD for its servers, and so far, no global alternative to the Santa Clara chip giants' products has emerged.
Consumer business accounted for 48.4% of Huawei's sales last year and China accounted for 51.6% of the company's total business. With 5G, Huawei's got the potential to increase its market presence in the country, especially as 5G is expected to provide internet connectivity to rural China. To that end, the company already intends to shift 5G power amplifier production to China.
Despite the US' hard-hitting rhetoric, Europe has continued to rely on Huawei for providing 5G infrastructure equipment. The motive behind this is fears of being left behind in the global race to the next-generation cellular standard. Huawei controls 28% of the global 5G networking equipment market, and given the manner in which things are proceeding in Europe, this number might increase. However, nothing can be said with certainty especially after Germany decided to tighten its approach towards the Chinese telecommunications giant yesterday.
Huawei's future will be clear later this month when American and Chinese officials are set to meet and decide the two countries' future. Till then, stay tuned and let us know what you think in the comments section below. We'll keep you updated on the latest.