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Huawei’s smartphone struggles are also affecting it in China


The ongoing US sanctions on Chinese technology giant Huawei are hitting the company hard. It’s smartphone sales have plummeted in 2020, also worsened by the coronavirus pandemic. Even at home, in China, the company’s smartphone business is adversely affected.

Counterpoint research’s latest market pulse report shows its smartphone market share in China dropped to 16 per cent in January 2021. The firm pinned Huawei’s market share decline due to the ongoing US sanctions largely.

Its smartphone troubles have also been further cemented by the Honor spinoff.

Counterpoint says the company faces a component shortage due to the sanctions and will not be able to source 5G smartphone components. Lack of 5G also means Huawei’s devices are less exciting in its home country, where over 65 per cent of smartphones sold in Q4 2020 were 5G capable.

Trying to adapt to the new normal, Huawei is shifting its focus on premium smartphones with higher margins. Recently, the company launched its new folding smartphone, Mate X2, in China.

The abrupt necessary shift has handed over opportunity in the medium tier market for other companies to capitalize on. And things are changing pretty fast.

The firm reveals that Oppo led the Chinese smartphone market in January 2021, for the first time. Oppo’s market share in January rose to 21 per cent, securing it the top spot, followed by sibling company vivo at 20 per cent. Huawei, Apple and Xiaomi had a similar market share of 16 per cent.

Xiaomi has been identified as the major beneficiary of Huawei’s online business, while Oppo and vivo are taking more of its offline segment.

Varun Mishra, a Senior Analyst at Counterpoint Research, says Oppo has been able to capitalize on the opportunity by repositioning its product lines last year. Its move to rebrand the Reno series has been credited for what feels like a sudden rise to glory in the lower premium market.

“The strong momentum of the A series in the mid-segment strengthened the product portfolio for OPPO, and it was able to cater to the 5G demand in China across a wide price band. This was further helped by the decline of Huawei,” Mishra said.

As of Q1 2020, Huawei had a 41 per cent market share followed by vivo, Oppo, Xiaomi and Apple with 17, 15, 11 and 9 per cent market share, respectively. But the future of the Huawei smartphone business doesn’t look brighter either.

Analysts predict further doom for the company’s already struggling smartphone business in 2021.

While Huawei’s market share continues its downtrend, other smartphone companies are expected to gain more market share.

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Alvin Wanjala

Alvin is a freelance tech journalist. Talk to me via email at alvinwanjala[at]pm[dot]me

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