Huawei Surges Despite U.S. Blacklisting

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.”

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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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Conversation 7 comments

  • PeterC

    01 August, 2019 - 1:39 pm

    <p>Yup…. and if you delve deeper you’ll find a lot of similar stats all of which affect US firms in the short to medium term in either loss of sales, or complete loss of Chinese market traction etc. Utter carnage for US companies who’ve spent years and serious $$ on building toeholds in an important growth market.</p><p><br></p><p>now watch HiSilicon eat it’s way into Qualcomm’s Chinese business by selling their chips to other Chinese manufacturers. Whisper it quietly ….Self reliance….. through home market growth. </p><p><br></p><p>Total numpty politics at play with people who still think the world can be like the 1980’s again…. “ catch ya later bill and ted”…</p>

  • Todd Northrop

    01 August, 2019 - 5:15 pm

    <p>Let's see if you are just as enthusiastic about reporting Huawei's revenue numbers next quarter, when the US embargo numbers actually make an impact. Go China! It is rather strange that a seeming majority of US tech writers want to cheerfully report the current Huawei numbers without highlighting that the lion's share of the numbers come from before the US action.</p>

    • wright_is

      Premium Member
      02 August, 2019 - 6:02 am

      <blockquote><em><a href="#446920">In reply to Speednet:</a></em></blockquote><p>Maybe I misread it, but doesn't Paul explicitly state what part of the sales came after the embargo and the estimated shortfall Huawei are forecasting for the next 2 years?</p><p>Most sites I've read have explicitly stated that only the last month and a half were with the embargo in place and that is why the figures, whilst impressive, are down on what was expected.</p><p><br></p><p>Edit: Ah, yes, this bit:</p><p><em>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.</em></p>

      • jrickel96

        03 August, 2019 - 8:13 pm

        <blockquote><em><a href="#447022">In reply to wright_is:</a></em></blockquote><p>Other thing to note that sales outside of China fell but sales in China made are where the difference was made. </p><p><br></p><p>Huawei has warned the next 1-2 years may be bumpy despite the good report right now. They are not out of the woods and they have reached a saturation point that could be a problem for further growth. For instance, they have not been able to crack India – I believe ZTE is the Chinese manufacturer that has made big inroads there. It also appears sales in Europe are beginning to reverse. Huawei has never made much of a dent in the US market. </p><p><br></p><p>Most growth recently has been from China and Europe. If the European market begins to go in a different direction, eventually Huawei's phone business will also go in a different direction. Especially since there is some evidence that China can only keep propping up its own companies for so long. Economic growth in China is continuing to fall. Much of what is there now has been built on hyper growth. There's doubt that it can sustain if that hypergrowth ends and real fears that the Chinese economy is a house of cards. Huawei also may be a house of cards. If China hits recession, Huawei may have a really rough go. The Chinese government has done everything it can to prevent recession, but it is running out of tricks.</p><p><br></p><p>Would not be surprised to see a massive China collapse in the next two years. </p>

        • wright_is

          Premium Member
          04 August, 2019 - 3:28 am

          <blockquote><em><a href="#447280">In reply to jrickel96:</a></em></blockquote><p>The carriers here (Germany) are still pushing Huawei phones heavily and they are still advertised on TV – with new promises that they will keep getting updates and that they will keep access to the Google Play Store and Google Apps in general.</p><p>The problem is, what will happen when the embargo comes back into force? If Android Q and new phones come out, before the embarge hits again, then Huawei can defer its competitive deficit for at least a year. It is a bit like Nasrudin teaching the horse to sing.</p>

          • jrickel96

            04 August, 2019 - 9:43 am

            <blockquote><em><a href="#447321">In reply to wright_is:</a></em></blockquote><p>Those carriers might have some liability if the updates stop and they are making promises. Though the potential hangups for Huawei go beyond just the embargo issue. The tariffs were only a small part of this quarter and there is no sign of them letting up. There's a lot of speculation that the Chinese are going to wait things out and hope they have a new President to deal with in 1.5 years. Though by then a lot of damage can be done. </p><p><br></p><p>There's not much China can do any more in response to US tariffs. There's a 5-to-1 ratio in favor of the US as an importer and remaining products imported into China from the US are high end, high tech items that will harm its tech sector if they slap import duties on them because they cannot find these items elsewhere. Imposing duties in that case will severely hurt China far more than the US. This includes Huawei. </p>

  • CompUser

    03 August, 2019 - 4:00 pm

    <p>Near as I've been able to find, Huawei has less than 0.5% of the U.S. market in 2018. Even a HUGE surge in their U.S. smart phone market percentage still wouldn't amount to much of a market, so why is this being made out to be such a big deal in the media? (I'm pretty sure Microsoft had a much bigger percentage.) That said, wasn't Huawei only banned from any involvement in the U.S. 5G network build out, but not consumer hardware sales in the U.S.? I know that isn't what's being reported by the U.S. media, who can't seem to report on anything without some kind of bias, but I'd swear that's what was originally reported.</p>

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