The logo of the Chinese company Huawei in their UK headquarters in Reading, west of London, on January 28, 2020.
Daniel Lil-Olivas | AFP via Getty Images
Huawei became the world’s largest smartphone player in the second quarter for the first time, according to a new Canalys report.
Most of the sales are to China, as its international business suffers from US sanctions.
The Chinese supplier supplied 55.8 million devices, which is 5% less than year-on-year, according to the research firm. Meanwhile, in second place Samsung put 53.7 million smartphones, which is 30% more than the same period last year.
For the first time, Huawei took first place in a quarter, whose ambitions were for several years.
But analysts are questioning whether this has become sustainable, given the fact that Huawei̵7;s foreign markets outside China have been hit by US sanctions against the company.
In the second quarter, Huawei sold more than 70% of its smartphones in mainland China. Meanwhile, deliveries of goods on smartphones in international markets in April-June last year decreased by 27%.
In Europe, a key region of Huawei, the company’s market share of smartphones fell sharply to 16% in the second quarter against 22% over the same period in 2019, according to Counterpoint Research. It is the third largest smartphone maker in Europe after Samsung and Apple, showing how Huawei’s global position in the second quarter was based on efforts to expand its share in China, the world’s second-largest economy.
Given China’s large population, success there often pushes companies to a large “global” market share.
“It will be difficult to maintain Huawei’s leadership in the long run,” said Mo Jia, an analyst at Canalys, according to a press release. “Its main channel partners in key regions such as Europe are increasingly wary of distributing Huawei devices, using fewer models and attracting new brands to reduce risk.”
“China alone will not have enough strength to keep Huawei on top once the global economy begins to recover,” he said.
Last year, Huawei was added to the list of legal entities in the United States, a blacklist that restricted its access to American technology. This meant that Huawei could not use licensed Google Android on its latest flagship devices.
In China, where Google services such as Gmail or its search engine are actually blocked, this is not a big deal because Chinese consumers are not used to using these products. However, in international markets, the absence of Google is a big blow.
This is one of the reasons why Huawei’s competitors, who can still use Android on their devices, have grown in the market. For example, in Europe, the Chinese company Xiaomi saw an increase in its market share from 6% in the second quarter of 2019 to 13% over the same period this year, according to Counterpoint Research.
Last year, Huawei was forced to release its own operating system called HarmonyOS. But earlier, analysts questioned its success in international markets, given the fact that the App Store does not have key programs.
The Chinese telecommunications giant has faced further pressure from Washington this year. The new rule, introduced in May, requires foreign manufacturers using chipmaking equipment in the United States to obtain a license before selling Huawei semiconductors.
This could affect Huawei’s ability to purchase chips for its smartphones. Although Huawei develops its own processors, they are manufactured by TSMC Taiwans, which may be affected by this rule.