Huawei Surges Despite U.S. Blacklisting

Posted on August 1, 2019 by Paul Thurrott in Android, Cloud, Mobile with 7 Comments

Thanks to blockbuster smartphone sales in China, Huawei generated $58 billion in revenues in the first half of 2019, a gain of 23 percent year-over-year. The gains came despite a U.S./China trade war that triggered a blacklisting of Huawei by the U.S. government.

“Neither production nor shipment has been interrupted, not for one single day,” Huawei chairman Liang Hua said. “No matter how many difficulties we might face, we remain confident in the company’s future development.”

But the U.S. did slow down Huawei’s growth. The firm’s revenues grew 30 percent YOY in the first quarter, but only 13 percent in the second quarter. And Huawei did acknowledge that the U.S. action had had an effect.

“Revenue grew fast up through May,” Liang Hua said, referring to the timing of the U.S. blacklisting. “Given the foundation we laid in the first half of the year, we continue to see growth even after we were added to the entity list. That’s not to say we don’t have difficulties ahead. We do, and they may affect the pace of our growth in the short term.”

Previously, Huawei founder and CEO Ren Zhengfei said that U.S. blacklisting could cost the company $30 billion in revenue, and that Huawei’s revenues in 2019 and 2020 would be about $100 billion, roughly the same as it was in 2018. The firm had originally expected to unseat Samsung as the number one maker of smartphones this year, but it now believes that won’t happen until 2020 or 2021.

Huawei shipped 118 million smartphones in the first half of 2018, a jump of 24 percent YOY. Globally, its unit sales fell slightly, but they exploded in China, more than making up the difference: Huawei shipped over 37 million smartphones inside China in the second quarter alone, about 64 percent of its total sales. With 40 percent marketshare, Huawei is the number one seller of smartphones in China, and it has expanded its lead in the second quarter by 10 percentage points. Helping matters, the smartphone market in China contracted slightly in the quarter while Huawei’s sales expanded: Oppo, Vivo, Xiaomi, and Apple all experience unit sales and marketshare drops in the quarter.

As for Huawei’s networking business, that is still going strong despite the blacklisting. The firm said this week that it had won over 50 contracts worldwide for 5G networking infrastructure in the first half of 2019. And 11 of them had come since the U.S. blacklisting.

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