The Covid pandemic, plus semi-conductor chip shortages and problems with a US ban on Chinese technology and in particular on Huawei’s smartphones and circuitry, have badly damaged the Chinese company’s revenues.
Huawei says that in the first half of 2021, the total revenue of consumer products including smartphones was 47 per cent lower than that of 2020. Huawei, according to a report from ID Tech, has been forced to shift its strategic focus away from its once most profitable sector.
Under US sanctions, Huawei’s revenue in the first half of 2021 was RMB 320.4 billion, which is a 38 per cent decrease from RMB 454 billion in the same period last year; Xu Zhijun, Huawei’s rotating chairman, pointed out that Huawei’s overall goal is to survive.
ID Tech, in its report, 5G Technology, Market and Forecasts 2022-2032, says Huawei first stocked up on nearly a year’s worth of chipsets and electronic components to mitigate the impact of the US sanctions on its 5G supply chain, which catalysed the global semiconductor shortage.
“Afterwards, Huawei sold its smartphone subsidiary ‘HONOR’ to Shenzhen Zhixin New Information Technology Company in 2020, so that HONOR could get chipset supply from US vendors such as Qualcomm and survive,” states the report.
“So far, Huawei’s smartphones introduced this year have all been 4G-only, indicating that the company has officially run out of the 5G chipsets it had stocked up before and is struggling to find another. Rumours are saying that Huawei may sell the rest of its smartphone business this year, however, Huawei has denied this. Nonetheless, it is no doubt that Huawei’s smartphone business is unlikely to return to its former glory anytime soon,” adds the report.
“Because of the huge 5G expansion in the Chinese market, Huawei’s infrastructure sector appears to be more solid. China accounts for over 60 percent of the total 5G infrastructure industry,” according to IDTechEx’s research report.
“Huawei is China’s leading 5G system vendor. According to the results of 2021 5G infrastructure bidding auctions published by China Mobile and China Telecom, Huawei secures around 60 per cent of the market share. Looking ahead, the 5G infrastructure market will continue to grow in China. It is also important to recognise the Chinese government’s impact on emerging countries such as Africa and Southeast Asia. Though 5G growth in those emerging countries is slower than in developed nations, it will happen, and Huawei will play a key part in that since Huawei is able to deliver 5G systems at the lowest market price, as well as thanks to the Chinese government’s efforts.”
The report asks: “Will Huawei survive? They are suffering, but there is no indication of Huawei giving up. Given the enormous size of the Chinese domestic market, their role in the booming 5G infrastructure rollout, major technology investments in key future trends, and the Chinese government’s financial and political support, Huawei’s odds of changing the tide in the future are not bleak.”