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Huawei confirms big sales drop due to ban (Update: US firms want ban reduced)
Update, June 17, 2019 (01:30 PM ET): It appears U.S.-based chipmakers — including Qualcomm, Intel, and Xilinx — are quietly lobbying the U.S. government to reduce the Huawei ban in an effort to not harm American companies.
According to Reuters, several reps from major chipset manufacturers met with the Commerce Department to discuss allowing companies to continue to sell certain products to Huawei. The argument they are apparently making is that selling something like a Qualcomm modem to Huawei does not negatively affect national security but does positively affect U.S. companies’ bottom line.
“This isn’t about helping Huawei. It’s about preventing harm to American companies,” one of the people said.
In 2018, Huawei spent about $70 billion on buying components from other companies, of which about $11 billion went to U.S. firms. With the ban in full effect, that’s $11 billion the U.S. economy won’t see this year.
Original article, June 17, 2019 (4:13am ET): Huawei has endured a torrid few weeks, as it continues to battle the effects of a U.S. trade ban. Between Arm, Google, Qualcomm, and other firms being unable to do business with it, the Chinese brand has suffered a major blow.
Now, Bloomberg reports that Huawei is expecting international smartphone sales to drop by 40 to 60 percent due to the ban. The outlet, citing several sources, says internal estimates are that there’ll be a sales drop of roughly 40 to 60 million devices this year. Huawei CEO Ren Zhengfei later confirmed the large drop in revenue but shook it off by saying growth happens very fast.
This makes for a big drop, especially as Huawei shipped 200 million smartphones in 2018. The company looked on course to narrow the gap and possibly pass Samsung in 2019, but this doesn’t seem to be the case any more.
Sources told Bloomberg that Huawei is also exploring several options in the wake of the U.S. trade ban, including the possibility of pulling the Honor 20 series. The range is already available in its home country of China, where it’s reportedly sold one million units in two weeks.
The new Honor phones are expected to launch in Europe on June 21, but it’s believed executives could cut off shipments if sales are poor. In fact, sources told the outlet that two of France’s biggest networks aren’t carrying the Honor 20 series at all. A Huawei spokesperson told Bloomberg that the launches were “proceeding.”
An Honor representative also told Android Authority that the Honor 20 series launch is going ahead on June 21 in the U.K.
“U.K. sales have so far not been impacted. We are doing good with Honor 20 Lite and as you can see we have gone all out in branding Honor 20 series around London tubes and in EU (sic),” the representative said via an emailed response, adding that the series will be available in other overseas markets too.
It’s also believed that Huawei is hoping to grab as much as 50 percent market share in China, which would help it offset the expected international sales decline. Huawei/Honor achieved 34 percent market share in Q1 2019 according to Counterpoint Research. This is a big leap over Q1 2018, when the company was sitting at 22 percent.
Would you buy a new Huawei phone in the wake of the U.S. trade ban? Let us know in the comments!