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To comply with U.S. orders, various key supply chain partners are suspending business relations with Huawei one after the other and although the company is putting up a brave face and saying the blockades will not affect it, analysts believe otherwise. Many of the Chinese giant’s key partners, including ARM, Intel, Qualcomm, Panasonic, and Google have frozen out Huawei and while the company trying to play down the ban by saying it’s trying to become self-sufficient, analysts believe its sales can take a major hit.
New Forecast Reports Smartphone Shipments From Huawei Dropping to 200 Million Units Instead of 258 Million, but the Outcome Is Still Uncertain as Things Can Turn Around in the Future
Huawei, which was aiming to become the number one smartphone maker in the world by next year, can see its sales go down by a quarter this year, according to analysts. Not only that, the company risks being wiped off from the international market if the situation continues. The latest statistics from Fubon Research and Strategy Analytics state that the company’s sales can fluctuate between 4 and 24 percent. Other experts also forecast the company’s shipment to go down over the course of the next six months, but given the current uncertainties, they can’t give an exact figure.
After Google revoked Huawei’s Android license, the company also allegedly had to postpone the release of the Honor 20 Pro because it wasn’t able to secure the necessary Google's Play Store certification before the U.S. blacklisted it. Strategy Analytics says that without Google’s support, the company may disappear from Western Europe. According to Statista's Global Consumer Survey, only about one percent of American smartphone users own a Huawei device, but the company has a much larger share in countries such as Italy, Spain, Germany, and France. However, without Google’s app and services, these consumers might switch to competing products.
In recent times, Huawei’s performance in the smartphone market has been very impressive. The company managed to grow in a declining market. While most of its sales came from China, its presence was also increasing in Asia, the Middle East, and of course Europe, where Chinese brands are becoming increasingly popular. Statista says that the company’s sales may slump 23 percent next year but speculates that the company will still manage to survive as China is one of the biggest smartphone markets in the world. Currently, the company is riding on the waves of nationalism in the country.
IDC reports that Huawei accounts for 30 percent of the smartphone market and it sold 208 million phones last year. For its high-end phones, the company considered Europe as its most important market. Some analytics firms have revised their shipping estimates already, with Fubon Research lowering its forecast from 258 million to 200 million for the current year.
Although Huawei’s CEO Ren Zhengfei says that the company is well prepared for what’s to come, experts think that the company might not survive without key components and intellectual property which are only available in the U.S. Per some analysts, the company might have to lay off some staff and lie low for some time. Meanwhile, the void left by the company will likely be filled by competitors, particularly Samsung.
News Source: Reuters