Huawei’s Rise to Top of Smartphone Market Has Stalled

Posted on June 11, 2019 by Paul Thurrott in Android, Mobile with 74 Comments

Huawei would have surpassed Samsung to become the number one smartphone maker in the world this year. Then the U.S. happened.

“We would have become the largest [smartphone maker by volume] in the fourth quarter of this year,” Huawei chief strategy officer Shao Yang said Tuesday during a speech in Shanghai. “But now we feel that this process may take longer.”

Huawei surpassed Apple to become the second-biggest smartphone maker in the world last year and its heady growth in recent quarters suggested that it would pass Samsung for the top spot by early 2020. But Shao provided some data to prove his contention that this milestone would have happened in 2019, had the U.S. government not blacklisted the firm, triggering software and hardware supply problems.

Huawei, he said, sells 500,000 to 600,000 smartphones every single day. It’s not clear if those figures represent the tally from before or after the blacklisting. But some are estimating that the company’s smartphone sales will fall as much as 25 percent this quarter. And that could continue unless the U.S. blacklisting—a vile trade war tactic disguised as a national security issue—is ended.

Huawei’s rise was all the more impressive because the firm has almost no presence in the U.S. smartphone market.

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Comments (74)

74 responses to “Huawei’s Rise to Top of Smartphone Market Has Stalled”

  1. Kudupa

    I completely understand the US problem with China with theft of intellectual property but Chinese companies have done work of developing their own tech from being ODMvto OEM with adopting. Now, US wants to curtail them with instead of out innovating them.

    I wouldn't buy Huawei phones because of their ugly skin but they a true hardware innovators.

    US is missing out on innovation and iterative improvements by silly policies and US carrier policies.

  2. lvthunder

    I'm so glad that Paul is so certain there isn't a national security issue with these Chinese companies. I on the other hand am not sure about that. I find it interesting that both the Obama Administration and the Trump Administration has problems with Huawei. Those two administrations are so opposite of each other it gives me pause when they both agree.

    Also if the next war is going to be a cyber war then why would you want your infrastructure built by someone who quite possibly be on the opposing side in that war. Isn't the general feeling is that it was the Chinese Government who breached Marriott?

  3. Pbike908

    I am not a big fan of DT, however, I do have to give him credit for FINALLY finding away to get the attention of the Global Elitists -- including those in his own party and the other party -- as well as China, Mexico, and all of the western nations that have been freeloading on the U.S. Global Police force and relatively barrier free U.S. market. And getting the attention of the global financial market.

    Especially finally finding away to get under the skin of the Chinese that have basically made hacking and stealing U.S. technology (as well as South Korean and Japan tech) a state priority -- Boeing, Apple, Qualcomm, GE Jet Engines, Solar panels, Intel, Samsung, Toshiba, etc...

    It remains the be seen whether or not DT can truly score an international victory here, as history as shown nation states when presented with a new obstacle invariably change their own strategies to adapt. And history is full of examples where unanticipated reactions can quickly escalate and get out of hand...It's also very plausible that DT may misplay or overplay his hand...

    It will be interesting to watch all of this play out...

  4. Bats

    LOL.....does anyone care what the Huawei Chief "Strategy" Officer has to say? Of course, he's going to say that.

  5. will

    They also have been making some impressive laptops in the past few years.

  6. YouWereWarned

    As we wait for DT to stumble his way through Govt 101, there is an obvious solution: reallocate all that money coming from Mexico for "the Wall" to instead build a Mexican factory where asylum seekers assemble cheap Huawei clones. Done and done...

    Regarding the security of mission-critical 5G infrastructure, my first choice of supplier would not be an adversary that steals anything not nailed down...with full gov't knowledge. Snowden opened a can-o-tactics that is surely emulated far and wide by now. Merely hoping our tech isn't tainted almost guarantees it will be.

  7. techguy33

    Huawei showed you could make a phone with a high-end feature set and sell it for half the price of Apple/Samsung, and Apple/Samsung could have none of that, so they sicked their dogs in U.S. govt on Huawei under the bogus pretense of national security, Paul nailed it.

    • MachineGunJohn

      In reply to techguy33:

      lots of phone manufacturers have shown this. It's just that much of the world has shown price insensitivity to smartphones so apple/Samsung have taken advantage of that. They could sell for half their current price and still be making over 100% markup. The reason Huawei has grown marketshare is that they've focused on the parts of the world that are price sensitive, hence lack of US presence even in the absence of a ban

  8. RobertJasiek

    I (German) have suspected Chinese gouvernment spying via Chinese IT companies for many years so I am very cautious buying their products. The USA takes related consequences on a larger scale. There is no hard evidence, and the politics are illogical (why not ban all Chinese IT companies?) and fought as a trade war. I dislike how it is fought in detail, approve the major concern from the US gouvernment perspective and miss the non-US perspective of US spying of the world.

    At the same time, I am indirectly affected as a consumer. Hardware prices may rise but my major concerns are: fewer companies from which I can buy while an increasing number are bought by Chinese companies; no major European hardware and software companies independent from Chinese and US state spying; no European OS with enough mobile hardware offerings (Linux notebooks do not help me because I need tablets / detachables),

    The war is fought as Huawei-only but its consequences are complex not just for me.

    • wright_is

      In reply to RobertJasiek:

      The problem is, living in Germany, that this decision affects the whole world, as you say. And it is more than just Huawei - and there is no proof against Huawei, only rebutals from non-US countries and their security services. Either the US argument is valid, in which case nothing made in China should be allowed to be imported, or it is just hot air and Huawei is caught in the middle.

      And the Germans, the UK and the EU have all had access to the hardware and source code and the UK's MI6, the BND and BSI have all said, sloppy code, but no obvious national security threat...

      On the other hand, Cisco has been removing dozens of backdoors from their code and the NSA was caught installing spyware on HP kit as it was en route to its allies.

      Why not ban all Chinese IT firms? Because they make all the "US" kit. Ban all Chinese IT manufacturers and you suddenly have no more iPhones, most of the networking kit disappears, no more Pixel, no more PCs from HP or Dell, among others. Lenovo disappear.

      There wouldn't be a lot left.

      • MachineGunJohn

        In reply to wright_is:

        not true there are plenty of MI6 and other foreign intelligence who concur with the US threat assessment, they just can't make a public statement to that effect. Except of course for the ones who have now left the service and have made public statements against allowing Huawei in their countries infrastructure. Also wrong on the effects of losing Chinas manufacturing. I know of several companies that have moved out in the past year and found their new facilities are already more cost effective and producing higher quality. Foxconn itself is looking at moving iPhone manufacturing to Vietnam. Losing Chinese manufacturing would only hurt the Chinese.

        • skane2600

          In reply to MachineGunJohn:

          As is the case with the US, if they had discovered a backdoor in equipment they could state it without any security issue. They don't, because they haven't. At least the US has mentioned their belief even if they haven't provided the necessary evidence to back it up. In the absence of any official statement we have no reason to believe it's true.

  9. wp7mango

    The biggest problem with this is that everyone outside of the USA is unnecessarily suffering as a direct result of a trade war between the USA and China. Basically, consumers in Europe are collateral damage as a direct result of US policy.

    I wonder if citizens of a different country can trigger a class action lawsuit against the USA?

  10. f.for.france

    So bad for Huawei, I am a happy owner of the p20 light device and since my previous device has been a Nokia with Windows OS, it is sad to know the next device I choose would also have issues with the OS ;( Crying right now!

  11. beckerrt

    Why do people care so much about a company with almost zero presence in the U.S.? Still trying to figure that out. Surely politics has nothing to do with it, right?

    • wright_is

      In reply to beckerrt:

      Because this has a lot of impact outside the USA. There are hundreds of millions of users who suddenly have a "worthless piece of junk" in their hands (well, it isn't quite that bad yet, at least the devices are still getting updates).

      Then there are the hundreds of millions around the world who use a telco that uses Huawei kit (including a lot of US rural providers), who will now have to replace a lot of backbone switches and wireless relay equipment that suddenly no longer has any support and replace it with more expensive kit, meaning higher bills for customers due artificially accelerated replacement cycles.

      Then you have the likes of Google, Qualcomm, Intel and Microsoft that will suddenly see a dip in sales and licensing - Google will experience something like a 20% drop in Android licensing revenues, won't be able to provide adverts to several hundred million users, won't be able to track several hundred million users and won't be able to sell them apps and services.

      The impact is huge, when you suddenly stop companies selling products and services to their second biggest customer!

    • Paul Thurrott

      In reply to beckerrt:

      They make better smartphones than the rest of the market, so they're interesting on that level alone. That they're not sold in the US directly is interesting. Their laptops are amazing too.

      Don't really care about their networking equipment per se. Not a big fan of the xenophobia around this and other Chinese companies.

      • SvenJ

        In reply to paul-thurrott:"Don't really care about their networking equipment per se" Maybe you should. That's the real issue, not their cell phones. China is a country that has the ability to 'accidentally' re-route cell/network traffic through their country. Having direct access to the equipment that does that routing would make that significantly easier.
        Xenophibia is a dislike/distrust/fear of other people, strangers, foreigners. This is about China and the Gov influence/control of companies, not the Chinese people. It's sort of backwards from here, where the companies control the Gov.

      • MassDude

        In reply to paul-thurrott:
        But is it xenophobia? Ren Zhengfei, the founder of the company, has direct ties to the People's Liberation Army of China. People supporting Huawei will clamor for 'evidence' of Chinese government involvement and spying, but do you think the US's (and other country's) intelligence services are just going to release that information publicly which would tip off Huawei? Don't think so.

        • wright_is

          In reply to MassDude:

          And how many ex-Colonels, Generals or Admirals sit on the boards or own companies in the USA? Or how many politicians or ex-politicians sit on the boards of companies?

          • MassDude

            In reply to wright_is:
            Not sure why you are so gung-ho to defend Huawei. Anyone who hasn't got their head buried in the sand would know that the Chinese government, known for stealing our tech as well as doing things like, as Svenj mentioned, 'accidentally' re-route cell/network traffic through their country, has exceedingly close ties to Huawei, which no doubt would do the government's bidding without question. Your reference to ex-Colonels, etc. sitting on boards on US companies is a straw-man argument, and not a very good one at that.

            • wright_is

              In reply to MassDude:

              I'm not defending Huawei per-se, but rather poking holes in the hypocrisy of the US government. Everything they seem to be accusing Huawei in particular, and China in general of doing, they have themselves done to their own allies! And if it is really about the Chinese and national security, why are Foxconn (etc.) still allowed to deliver deliver kit to the USA? Surely all companies in China should be banned. And if Huawei is really that bad, where is the proof?

              And what is with Trump? Huawei banned because it is a security risk, but if a trade deal with China is agreed upon, that would open the door for Huawei to resume business as usual? How does that work? If they are a security risk, making an agreement with China doesn't suddenly stop them being a national security risk! Either they are a security risk, or this is just sabre rattling to get the Chinese to fall in line on the trade agreement.

              The US glasshouse seems to have a lot of broken panes, what with all the stones flying around.

              The reference to ex-military and politicos is pertinent, this has been the way of doing business in Western countries for decades, if not centuries. In the UK it is called the old boy network or old school tie network. Deals made behind closed doors, doing (political) favours "off the books", "friends" winning contracts, bribery (just look at lobbying of government officials, it is just legalized bribery).

              The US has been caught several times manipulating equipment en-route to customers, caught spying on its allies.

              So, how is the US any better than China? To me it doesn't make any difference, whether it is China or the USA that is spying on me, both are abhorrent - only, so far, it has only been proven that the USA is spying on us.

        • wosully

          In reply to MassDude:

          Unbelievable that Paul and others want intell released so they feel they have the entire picture. It saddens me to see other Americans view this an economic when two administrations are in agreement.

          • wright_is

            In reply to wosully:

            Yet the security services in other countries have studied the hardware and software and claim there is no problem, including many US allies (UK, European Union, Germany etc.).

            Therefore the US must either put up or shut up. Either there is something real or this is just hot air and rhetoric for the trade war.

      • beckerrt

        In reply to paul-thurrott:

        I just think people are way overreacting to this, in the US at least, because of their views of the president and his actions. Most "normal" people have no idea what a Huawei is. Seriously. As long as their Apples and Samsungs work, it's all good.

        • wright_is

          In reply to beckerrt:

          Stop being so parochial, this is an issue with huge global repercussions.

          • beckerrt

            In reply to wright_is:

            Hopefully what it does is make other countries realize their dependence on US technology and how devastating it is when they are cut off. More homegrown tech outside of the US is probably a good idea.

            • wright_is

              In reply to beckerrt:


              This has shown that we (non-Americans) should not rely on products using Android, iOS, Windows, Intel or Qualcomm, for a start. Any US-based cloud service is also a no-no.

              • lvthunder

                In reply to wright_is:

                Wow talk about an over reaction. China hasn't been playing fair for a long time and the US now has a president that's sick and tired of it and is actually doing something about it. I've heard about China stealing IP and manipulating currency my entire life.

                Treat the US fairly and the US will treat you fairly back. It's a simple concept.

                • ommoran

                  In reply to lvthunder:

                  To give a Canadian perspective - where if the US sneezes, we catch the cold... - your impression of US fairness is incorrect.

                  Your president's negotiation instructions are not to achieve a fair and negotiated settlement. He looks at any negotiation as a zero sum game. He enjoys the sport of the negotiation, nothing more, so he picks fights that don't need to be picked.

                  He doesn't want a fair deal, he wants a deal that tips towards the US. He is simply leveraging the need of other countries (us as an example - the US's single largest trading partner and largest supplier by far of that spectre "foreign oil") to trade with the US against his ability to bully them into a 52% / 48% deal in favour of the US.

                  The G20 this month will be interesting. I wonder if he'll storm out again, like he did at the G8 here in Quebec.

                • wright_is

                  In reply to lvthunder:

                  And before that Korea didn't play fair, and before that Japan and before that the USA. Your point being? Don't do as we do, do as we say?

                • wp7mango

                  In reply to lvthunder:

                  In your comment, not once have you mentioned security. All you have mentioned is being treated fairly, which has nothing to do with security.

                  And that's the whole point - this issue does indeed have nothing to do with security and everything to do with trade, being treated fairly etc, therefore the issue of security is just a smokescreen.

      • wosully

        In reply to paul-thurrott:

        Paul, is it xenophobia if it's based upon intelligence community facts? Just wondering if that matters.

        • jimchamplin

          In reply to wosully:

          There are no facts. Other countries’ intel groups have looked into the problem and found nothing. But over here, the nation isn’t run off of things like facts and knowledge.

          It’s all based on the opinions and “faith” of pig-ignorant 70-year-old white men in expensive suits who’s only concepts revolve around money and more money.

          And racism. Can’t forget that they’re racist dogs.

        • karlinhigh

          In reply to wosully:

          It would probably matter more if people didn't remember intelligence failures about Iraqi weapons of mass destruction.

        • wright_is

          In reply to wosully:

          What facts? Can you point me to them? The UK and European intelligence community have studied the hardware and source code and couldn't find anything incriminating, yet the USA, without having looked at these resources allege there are backdoors and security risks in the networking kit...

  12. Stocklone

    Maybe Paul needs to write "safe space" version of articles so people don't get triggered. Clearly he has some sensitive readers.

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