Even in China, Huawei is no longer in the Top 5

The Chinese flagship Huawei is losing ground, including in its country. It is no longer in the top 5 manufacturers who sell the most smartphones.

The trade war waged by the United States and China under Donald Trump has not only damaged Huawei's positions in the smartphone market in the West. It has also obviously weakened the Chinese company in its own country. In any case, this is what emerges from a study carried out by the firm IDC, published on July 29.

IDC's analysis, which covers the second quarter, shows Huawei's notable absence from the top 5 smartphone makers that sold the most devices in the last three months of spring. There are four Chinese brands (Vivo, Oppo, Xiaomi and Honor, in first, second, third and fifth position) and one American brand (Apple, in fourth place).

Huawei is now classified in the catch-all category entitled "Other", which accounts for 17.9% of smartphones sold in the quarter. The precise share of Huawei in this group is not specified, but considering the percentage that Honor has with its fifth position, it is certainly less than 8.8%. In short, less than one mobile in ten was a Huawei.

Sales of Huawei smartphones are no longer sufficient to allow it to climb to the top of the manufacturer rankings. Including in China. //Huawei

It is undoubtedly a collapse for the Chinese high-tech flagship. In 2018, the brand rose to second place in the world for smartphone sellers, overtaking Apple. In China, the company was even number one, with a market share of 27%. IDC's figures for the second quarter of 2020 gave Huawei the top spot, with 20% market share worldwide.

Ironically, the Honor brand, which is present in the Chinese top 5, was a subsidiary of Huawei. However, it was sold in November 2020 to a consortium of Chinese industrialists. Unlike its former parent company, entangled in major difficulties caused by the war between Washington and Beijing, Honor was lucky not to be targeted by the United States and therefore did not encounter the same obstacles.

A battered business

That the positions acquired by Huawei in Europe or North America suffer from American sanctions is not a surprise. Huawei's future in smartphones appears increasingly blocked, we wrote a year ago, due to a pincer movement affecting both the software (ban on access to the Google ecosystem) and the hardware (blockade on certain components).

On the other hand, it was less obvious to guess the fall of the telecommunications colossus on its own land, in any case in the field of smartphones – because the titan remains very powerful in the equipment sector, in particular in the field of 5G, and it maintains the support of the Chinese Communist Party, since it uses it as a vector of influence and power abroad.

Huawei may have benefited from a surge of patriotic fever in China in 2020, when tensions between the United States and China were growing. The champion being mistreated abroad, it was necessary to support him at home. But that obviously only lasted a while. Once the passions subsided, there remained a reality: Huawei found itself with a limited OS and deprived of advanced components.

5nm processors at TSMC // Source: TSMC

Admittedly, Huawei has provided the beginning of an answer with its own ecosystem, HarmonyOS, which must replace Android or, at least, allow the company to do so if forced to. But the answer turned out to be unspectacular, since it is – in view of the analysis that has been made – of a derivative version of Android.

Does this mean that Huawei is finished? Probably not: the group remains a titan, certainly in bad shape on the smartphone market. But it still has some cards to play, starting with HiSilicon, its semiconductor division. The concern is that it depends on the Taiwanese firm to produce components, and it has been asked not to trade with HiSilicon anymore.

Another lead could be the Chinese founder SMIC (Semiconductor Manufacturing International Corporation), which was however the target of American sanctions in December 2020. However, its expertise in semiconductors is not as advanced as the three tenors which are Intel, TSMC and Samsung. SMIC offers a much less fine engraving.

The episode underlines in any case the influence that the United States retains on high technology issues (for example by pushing Amsterdam to block the export of extreme ultraviolet photolithography machines). It also shows how much China depends on foreign sources for semiconductors. And how fragile a colossus can have feet, including at home.

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