Huawei reassesses goal to be world’s top-selling smartphone vendor

Huawei Technologies is reassessing its target to become the world’s top-selling smartphone vendor by 2020 after a US trade ban raised serious questions about its access to services that are crucial for international sales, according to a senior executive.

The company is now closely observing and evaluating the situation after the US government barred American companies from supplying the Shenzhen-based telecommunications equipment giant, according to Zhao Ming, president of Honor, one of Huawei’s smartphone brands, at a media briefing in Shanghai on Friday night.

Photo credit: Huawei

“As the new situation has emerged, it is too early to say whether we are able to achieve the goal,” Zhao said, responding to questions about Huawei’s plan to overtake Samsung Electronics and become the world’s largest smartphone vendor before the end of 2020.

The US government in mid-May placed Huawei and its affiliates on a trade blacklist that restricted the company from buying services and parts from US companies without approval.

After the move, US corporations including chip makers Intel, Qualcomm, Xilinx, and Broadcom have reportedly told their employees not to supply Huawei until further notice. Google also suspended Huawei’s access to future Android operating system updates, affecting its ability to offer popular Google apps on its phones in the future.

Foxconn, the Taiwanese electronics manufacturer that assembles handset products for many phone brands including Apple and Xiaomi, has stopped several production lines for Huawei phones in recent days as the Shenzhen company reduced orders for new phones, according to people familiar with the matter, who asked not to be named as the information is private.

Smartphone manufacturers have flexibility built in their production schedules and can increase or reduce orders to meet changing conditions. It is not clear whether the decreased production is temporary or part of a longer-term cut, the people said.

Foxconn had initiated a massive recruitment drive earlier this year due to Huawei’s surging sales, according to one person. Foxconn declined to comment, while Huawei did not immediately respond to request for comments.

Huawei’s share of global smartphone shipments climbed to 15.7% in the first quarter of 2019, up from 10.5% in the same period last year, according to data from industry research firm Gartner. Samsung and Apple, currently the world’s largest and the third largest vendor, respectively, saw their market share decline to 19.2% and 11.9%, respectively, in the first three months, the data showed.

Huawei, which calculates its global mobile shipments by combining both Huawei- and Honor-branded phones, is aiming to win 50% of the Chinese smartphone market by the end of this year and wrest the global sales crown from South Korea’s Samsung no later than 2020, its mobile chief Richard Yu Chengdong said in March.

At Friday’s event in Shanghai, Zhao did not answer the question from reporters whether Honor’s business has encountered difficulties in overseas markets after the US ban. When asked about the cut in production, he said he was not aware of the situation.

“All the difficulties make us stronger, no matter in mentality or in action,” Zhao said during the media briefing for the unveiling of flagship Honor 20 series for the Chinese market. The event followed the global launch in London 10 days earlier.

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