Why hasn’t Huawei abandoned the smartphone market yet?

17/02/2021 09:15 GMT + 7

Despite declining sales due to the US ban, the Huawei founder insisted that he ‘never’ sell his smartphone parts.

Last week, Huawei founder and CEO Nham Chinh Phi said the company was willing to transfer 5G technology but never gave up on the smartphone segment. Nham made such assertions although smartphone sales – which he describes as “terminals for network connectivity” – have been on the decline since the US introduced trade embargoes against Huawei.

Just in the summer of 2020, Huawei surpassed Samsung as the world’s largest smartphone maker. But in the fourth quarter, the Chinese phone company fell to sixth place, according to the data of research firm Canalys. Meanwhile, research firm TrendForce predicts Huawei will continue to downgrade to seventh this year.

Huawei abandoned some parts, for example, in November 2020, selling its budget phone brand Honor to an alliance of 30 dealers and brokers. Since then, rumors about the possibility of selling premium brands Mate and P also arose. Even so, the company maintains its commitment to sticking with the expensive smartphone market. Analysts say they are an integral part of Huawei’s overall business.

Terminal equipment, especially smartphones, helps build a strong user base, generating revenue from other services. The best examples are Apple and iPhone. Mr. Nham calls any device that can connect to humans or objects as terminals. Therefore, the definition also includes radar systems used in self-driving cars and smart indoor IoT devices.

IDC Equipment Research Vice President Bryan Ma said that terminal equipment is a separate term for the telecommunications industry, reflecting Huawei’s roots because it had the mission of connecting terminals to networks for many years. An important piece in this picture is Harmony, the operating system that appeared three months after the US put Huawei on the Entity List embargo list in 2019. The order caused Google to stop providing apps and services on products. Huawei and Huawei are not allowed to buy US parts.

In September 2020, Huawei announced that it plans to move from Android to Harmony on all smartphones from 2021. Harmony is not only for phones but also for many other categories such as tablets, computers, and smart TVs made by Huawei. . For example, it is being used by more than 20 hardware companies such as Midea, Joyoung, and Robam Appliances.

Huawei also wanted to supply the necessary telecom equipment and software for smart cars, establishing the Smart Car Solutions (Huawei HI) platform in which Harmony played the role of the driver. To keep the connected ecosystem strategy alive and growing, Huawei needs to keep the terminal department alive, at least in China. Success at home can spread to other countries with the help of Harmony.

However, the biggest obstacle that Huawei is facing is the US embargo that makes it difficult to buy components. Richard Yu Chengdong, CEO of Huawei’s consumer division, admitted that in August 2020. The impact of the ban doesn’t stop with smartphones. The chip problem is a risk for most products in the terminal department, ranging from consumer electronics, 5G to car communication equipment as they all depend on different chip products that Huawei cannot be self-produced. According to a Sales Manager at Chinese telecom company Quectel Wireless, Huawei is having a 5G module problem.

Huawei must also keep an eye on US policies to maintain competitive advantage and stabilize the supply chain. It is difficult for an ecosystem strategy to be sustainable when sales decline. Tarun Pathak – Deputy Director of mobile devices and ecosystem research firm Counterpoint – commented that if the US government adopts a more diplomatic stance with Chinese companies, Huawei will have the opportunity to live, especially in terms of terminal edge.

The consumer electronics division, which includes smartphones, contributes 54% of Huawei’s 2019 revenue and is the fastest growing division. Other experts note that selling a part that is doing well does not solve the US ban problem and only makes Huawei lose an important source of revenue.

Mr. Nham is confident that the new businesses will compensate for the decline in revenue from the smartphone segment this year. Huawei is investing in new growth areas like smart cars, while also focusing more on existing segments like the cloud. But he also admitted removing Huawei’s name from the US blacklist is “particularly difficult”.

Du Lam (According to SCMP)

Huawei founder insisted never sell smartphones

Huawei’s founder insisted never sell smartphones

Mr. Nham Chinh Phi has shares about the new US administration and Huawei’s ability to survive in the future.


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