Huawei. It's the patriotic choice: Mobe behemoth predicts 20% sales spike despite US sanctions

But analyst reckons that's 'ambitious' given dependence on Chinese punters


Huawei is bullish about seeing a 20 per cent uptick in smartphone sales next year despite the escalating US-China trade war – a prediction branded by analyst Canalys as "ambitious".

The Chinese phone and infrastructure kit maker said it expects to see a spike in demand even if it is still blocked from using the latest Google software. Huawei confirmed in late August the Mate 30 will not have access to the Play Store app, including Google Maps, YouTube and Gmail.

Six months ago the US barred Huawei from buying American components and software without a special licence (by placing it on the Entity List) though certain US suppliers to Huawei were given a three-month reprieve on two separate occasions. Recently, however, US commerce secretary Wilbur Ross expressed "optimism" a Huawei licensing would be inked soon.

Currently, phone components affected by the ban includes Google's Android operating system and apps, semiconductor design tools from Synopsys and Cadence Design Systems Inc, and radio frequency chips made by Qorvo and Skyworks.

But Will Zhang, Huawei president of corporate strategy, told Bloomberg it can rely on its huge domestic market and in-house software for growth.

"There are many ways for our US partners to find global solutions, rather than ship from a single US-based source," Zhang said at Huawei's Shenzhen headquarters.

He claimed conservative growth estimates would see shipments rise by 20 per cent next year, while the best-case projection is for a rise of 40 per cent. "Even for the pessimistic one, we see small growth," he said.

However, Mo Jia, a researcher at Canalys based in the analyst's Shanghai office, told The Register that under the current situation, "this plan is rather ambitious" as Huawei is still at risk of the China-US trade war and unable to install GMS on its latest products.

The target is not impossible, he added, because Huawei could further its dominance in China, a market it forecasts to reach around 400 million smartphones in 2020.

According to Canalys, Huawei shipped 68 million phones globally in the third quarter of 2019, up 29 per cent compared with the same time last year.

"Huawei already gained more than 40 per cent share there. If it advanced to 50 per cent then China alone would grant Huawei 200 million in 2020. However, Huawei's lead in China is not unbudge-able as its products are widely regarded as the patriotic choice, and this trend could be swayed."

When it comes to the overseas market, Huawei managed to launch smartphones of pre-Entity List specs with GMS - the Nova 5T and the Honor 9X international version in some countries, Jia noted.

"However, its products are becoming less competitive against Samsung and Xiaomi, as they are refreshing their portfolios every month. Without Google's support, it would be very challenging for Huawei to achieve the same level of overseas performance. For example, in Western Europe, Android users rely heavily on GMS, and it will be difficult for Huawei to buck this habit.

"In short, Huawei needs to find ways to gain channels, as well as consumers' trust on the non-Google smartphones, and try everything to stabilise its lead in China, if it really aims to have 20 per cent growth in 2020." ®

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