Huawei surprised the world last quarter when it overtook Samsung to become the number one smartphone manufacturer. But soon, the Shenzhen-based company could experience a historic fall from grace.
Huawei is expecting a 75% drop in sales next year
The Elec has learned from people with direct knowledge of the matter that Huawei recently shared its all-important internal smartphone sales forecast for 2021 with a group of South Korean subcontractors.
Unsurprisingly, the numbers look extremely bleak. Huawei is reportedly planning to produce around 50 million smartphones next year, which would represent a decline of almost 75% when compared to 2020 sales estimates.
The company shipped an incredible 240 million smartphones throughout 2019 and is expected to ship 190 million units this year. The targets for 2021 are equal to 21% and 26% of these totals respectively.
Huawei’s reduced shipment target comes shortly after it cut component orders for the upcoming Mate 40 and Mate 40 Pro by 30% in light of recent sanctions. Come September 15, the company will no longer be able to manufacture Kirin chipsets or purchase chipsets that rely on US technology.
Huawei is in the process of stockpiling components and will have enough for 3-6 months of business.
After that, Huawei’s once-lucrative smartphone division could collapse entirely unless the US government sanctions are eased or a workaround is found. But at the moment, neither of these scenarios seem very likely.
Huawei is at risk of becoming the modern-day Nokia
Nokia saw its historic mobile phone business collapse in the early 2010s because it failed to anticipate the rise of Android and bet its entire future on the failed Windows Phone & Windows 10 Mobile operating systems.
Huawei’s situation is completely different, but the brand is arguably at risk of becoming the modern-day Nokia. And, once again, the companies that look set to benefit the most from the downfall are Samsung and Apple.
The Elec claims Samsung is hoping to steal the customers Huawei leaves behind in 2021, particularly those in Europe, and has set itself an internal smartphone sales target of 300 million units. In 2019 the company shipped 295 million devices and this year shipments should land in the region of 250 million.
That will be helped by the ongoing tensions between India and China, which look set to negatively impact rival brands such as Vivo, Oppo, and Xiaomi.
The Elec believes the company will benefit from Huawei’s shrinking business in China in the low-end and mid-range segments. Over in the high-end segment, however, Apple is likely to eat up market share. That is, of course, unless the company is targeted by China in retaliation.
Apple is also expected to benefit from a lack of Huawei flagships in Europe. In recent years the latter has focused heavily on the region’s premium market, but Apple will probably claw back any lost customers.
Huawei is pushing ahead regardless of the mess
Regardless of the headwinds, Huawei is pushing ahead and recently announced a commitment to customers in Europe. But whether the company can escape the current mess as it has done so far will remain to be seen.