The Chinese flagship Huawei is losing ground, including in its country. It is no longer in the top 5 manufacturers who sell the most smartphones.
The trade war waged by the United States and China under Donald Trump has not only undermined Huawei’s positions in the smartphone market in the West. It has also obviously weakened the Chinese company in its own country. This is in any case what emerges from a study conducted by the firm IDC, published on July 29.
IDC’s analysis, which covers the second quarter, shows Huawei’s notable absence from the top 5 smartphone manufacturers with the most devices in the last three months of spring. There are four Chinese brands (Vivo, Oppo, Xiaomi and Honor, in first, second, third and fifth position) and one American brand (Apple, in fourth place).
Huawei is now classified in the catch-all category called “Other”, which accounts for 17.9% of smartphones sold in the quarter. Huawei’s precise share in this group is not specified, but considering the percentage that Honor has with its fifth position, it is certainly lower than 8.8%. In short, less than one in ten mobiles was a Huawei.
It is undoubtedly a collapse for the Chinese high tech flagship. In 2018, the brand had risen to the second place in the world among smartphone sellers, overtaking Apple. In China, the company was even number one, with a market share of 27%. IDC’s figures for the second quarter of 2020 put Huawei in first place, with a 20% market share globally.
Ironically, the Honor brand, which is present in the Chinese top 5, was a subsidiary of Huawei. However, it was sold in November 2020 to a consortium of Chinese manufacturers. Unlike her former parent company, entangled in major difficulties caused by the war between Washington and Beijing, Honor was fortunate not to be targeted by the United States and therefore did not encounter the same obstacles.
A battered company
That the positions acquired by Huawei in Europe or North America suffer from US sanctions is no surprise. Huawei’s future in smartphones appears increasingly blocked, we wrote a year ago, due to a pincer movement affecting both software (ban on access to the Google ecosystem) and the material (blockade on certain components).
On the other hand, it was less obvious to guess the fall of the telecommunications colossus on its own land, at least in the field of smartphones – because the titan remains very powerful in the equipment sector, especially in the field of 5G, and it keeps the support of the Chinese Communist Party, since it uses it as a vector of influence and power abroad.
Huawei undoubtedly benefited from a surge of patriotic fever in China in 2020, when tensions between the United States and China were growing. The champion being abused abroad, it was necessary to support him at home. But that obviously only lasted a while. Once the passions had calmed down, there was one reality: Huawei found itself with a limited OS and deprived of advanced components.
Certainly, Huawei has provided the beginning of a response with its own ecosystem, HarmonyOS, which must replace Android or, at least, allow the company to do so if it is forced to do so. But the response turned out to be unspectacular, since it is – in view of the analysis which was made of it – a derivative version of Android.
Does this mean that Huawei is ruined? Undoubtedly not: the group remains a titan, admittedly in bad shape in the smartphone market. But it still has some cards to play, starting with HiSilicon, its semiconductor division. The concern is that it depends on the Taiwanese firm to produce components, and the latter has been asked to no longer trade with HiSilicon.
Another lead could be the Chinese founder SMIC (Semiconductor Manufacturing International Corporation), which was however the target of American sanctions in December 2020. However, its expertise in semiconductors is not as extensive as the three tenors that are Intel, TSMC and Samsung. SMIC offers a much less fine engraving.
In any case, the episode underlines the influence that the United States maintains on high technology issues (for example by pushing Amsterdam to block the export of extreme ultraviolet photolithography machines). It also shows how much China depends on foreign countries for semiconductors. And how fragile a colossus can have his feet, including at home.