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Huawei’s Smartphone Star Is Quickly Fading As US Restrictions Bite
Huawei is expected to produce much fewer smartphones this year after US restrictions blocked its access to key hardware and software. Plunging supplies of Huawei phones are forcing franchise retailers to close stores or switch to selling other domestic brands. At a premier spot in Donlim Emperor Court, a shiny new shopping center in the southern Chinese city of Foshan, stands a 1,700-square-foot Huawei store. With massive Huawei logos adorning its walls, the franchise outlet has been such a treasured presence that the mall’s property management featured it in promotional materials to woo potential tenants. On a recent visit, the store was deserted, save for a tiny Christmas tree and a few pieces of furniture. The door was locked. It turns out that the shop permanently closed right before Lunar New Year, just eight months after opening.
The sharp decline in production has dealt a massive blow to Huawei’s retail distributors. Eddie Cen, a leasing manager at Donlim Emperor Court, said he was told by the owner of the closed Huawei store that supplies for Huawei devices had dried up. That distributor, which operated 30 Huawei outlets at its peak, is closing at least nine of them, according to Cen. The problem is not unique to Foshan. Across the country, reports of dwindling stocks of Huawei smartphones have surfaced in recent months as retailers switch to selling other domestic brands such as OPPO, Vivo, Xiaomi and Realme. The brand had been popular among domestic retailers partly because its models often offered a fatter profit margin. A new Huawei phone could be sold for as much as 1,000 yuan (US$154) above the sourcing price, or three times the margin of other Chinese brands, said Tony Zhang, a phone vendor in Foshan. Domestic demand for Huawei phones had also been riding high on patriotic sentiment amid rising US-China tensions. For many Chinese consumers, Huawei is seen as a symbol of national pride.
Last summer, the company briefly dethroned South Korean giant Samsung Electronics as the world’s top smartphone seller, with robust shipments in China offsetting large declines in other parts of the world. By October last year, Huawei said the number of its “retail experience stores” in China surpassed 10,000 and remained the bestselling smartphone brand in China. While Huawei was first subject to Washington’s sanctions in 2019, the company was initially able to produce smartphones with semiconductors it had stockpiled from US suppliers and ramped-up orders from Taiwan Semiconductor Manufacturing Co. Expanded sanctions last year, however, banned foreign chip makers that use US technology from selling to Huawei without Washington’s approval. The move cut off Huawei from most global chip suppliers. Huawei is expected to produce only 70 to 80 million handsets this year, a significant decline from the 189 million units it shipped last year, according to market research firm IDC. In Huaqiangbei, an electronics market in the southern Chinese tech hub of Shenzhen and a trading center for mobile phones, none of the five stores that the South China Morning Post visited had inventory for the Mate X2. One retailer said that some people seeking high-end Huawei models like the Mate X2, priced officially at 17,999 yuan, because of their rarity. “Few people will buy this foldable phone for daily use, but people will buy it as a gift. The price has increased to over 24,000 yuan.” Even more mainstream products, such as the Mate 40 Pro, Huawei’s flagship 5G smartphone that launched in China in December, are running out of stock. “For the yellow Mate 40 Pro, for instance, my store may have only one or two left,” one retailer said.
Huawei’s remaining reserves of Kirin 9000 chips, the ones used in Huawei P40 models, may still be able to support limited production of the upcoming P50 and Mate 50, according to a recent report from Tencent News. Production of most mid-range and budget phones has been discontinued. The shortage has created a black market for Huawei handsets. Ben Xu, a resident in the southern city of Guangzhou who promised to gift his employees Huawei phones late last year, said he was forced to pay an additional 500 yuan for each unit he bought. “There is no way you can get Huawei phones through the regular channels,” Xu said. While Huawei phones remain beloved by some of its most loyal fans – the foldable Mate X2 sold out within one minute of its online debut – some analysts said Huawei might soon lose its edge to rival brands.
The US keeps harping that Huawei is a security threat but has presented no proof of its accusations. The only proof presented was NSA hacking Huawei, Cisco, and Juniper gear and spies on Huawei and the Chinese government. Speculation on the reason for the ban is to stop China’s technology rise. Huawei is key in that effort, hence the effort to drag Huawei down. When the trade talks first started, they abruptly stopped because China refused to abandon its ‘Made in China’ initiative that would leapfrog China in technology and Huawei was the tip of the spear in that drive for technology. So, the US government is using its technological mite to stop Huawei. Trump saw the damage to ZTE when it was halted from buying US parts for 7 years thought he would do the same to Huawei to get similar results? But Huawei is not ZTE. Huawei has its own semiconductor design subsidiary called HiSilicon. HiSilicon has over 200 chip designs, all for Huawei products. So, Huawei production was still rising when Trump’s ban on semiconductor equipment supply and products took effect devasting the Huawei’s production
Huawei is expected to produce much fewer smartphones this year after US restrictions blocked its access to key hardware and software. Plunging supplies of Huawei phones are forcing franchise retailers to close stores or switch to selling other domestic brands. At a premier spot in Donlim Emperor Court, a shiny new shopping center in the southern Chinese city of Foshan, stands a 1,700-square-foot Huawei store. With massive Huawei logos adorning its walls, the franchise outlet has been such a treasured presence that the mall’s property management featured it in promotional materials to woo potential tenants. On a recent visit, the store was deserted, save for a tiny Christmas tree and a few pieces of furniture. The door was locked. It turns out that the shop permanently closed right before Lunar New Year, just eight months after opening.
The sharp decline in production has dealt a massive blow to Huawei’s retail distributors. Eddie Cen, a leasing manager at Donlim Emperor Court, said he was told by the owner of the closed Huawei store that supplies for Huawei devices had dried up. That distributor, which operated 30 Huawei outlets at its peak, is closing at least nine of them, according to Cen. The problem is not unique to Foshan. Across the country, reports of dwindling stocks of Huawei smartphones have surfaced in recent months as retailers switch to selling other domestic brands such as OPPO, Vivo, Xiaomi and Realme. The brand had been popular among domestic retailers partly because its models often offered a fatter profit margin. A new Huawei phone could be sold for as much as 1,000 yuan (US$154) above the sourcing price, or three times the margin of other Chinese brands, said Tony Zhang, a phone vendor in Foshan. Domestic demand for Huawei phones had also been riding high on patriotic sentiment amid rising US-China tensions. For many Chinese consumers, Huawei is seen as a symbol of national pride.
Last summer, the company briefly dethroned South Korean giant Samsung Electronics as the world’s top smartphone seller, with robust shipments in China offsetting large declines in other parts of the world. By October last year, Huawei said the number of its “retail experience stores” in China surpassed 10,000 and remained the bestselling smartphone brand in China. While Huawei was first subject to Washington’s sanctions in 2019, the company was initially able to produce smartphones with semiconductors it had stockpiled from US suppliers and ramped-up orders from Taiwan Semiconductor Manufacturing Co. Expanded sanctions last year, however, banned foreign chip makers that use US technology from selling to Huawei without Washington’s approval. The move cut off Huawei from most global chip suppliers. Huawei is expected to produce only 70 to 80 million handsets this year, a significant decline from the 189 million units it shipped last year, according to market research firm IDC. In Huaqiangbei, an electronics market in the southern Chinese tech hub of Shenzhen and a trading center for mobile phones, none of the five stores that the South China Morning Post visited had inventory for the Mate X2. One retailer said that some people seeking high-end Huawei models like the Mate X2, priced officially at 17,999 yuan, because of their rarity. “Few people will buy this foldable phone for daily use, but people will buy it as a gift. The price has increased to over 24,000 yuan.” Even more mainstream products, such as the Mate 40 Pro, Huawei’s flagship 5G smartphone that launched in China in December, are running out of stock. “For the yellow Mate 40 Pro, for instance, my store may have only one or two left,” one retailer said.
Huawei’s remaining reserves of Kirin 9000 chips, the ones used in Huawei P40 models, may still be able to support limited production of the upcoming P50 and Mate 50, according to a recent report from Tencent News. Production of most mid-range and budget phones has been discontinued. The shortage has created a black market for Huawei handsets. Ben Xu, a resident in the southern city of Guangzhou who promised to gift his employees Huawei phones late last year, said he was forced to pay an additional 500 yuan for each unit he bought. “There is no way you can get Huawei phones through the regular channels,” Xu said. While Huawei phones remain beloved by some of its most loyal fans – the foldable Mate X2 sold out within one minute of its online debut – some analysts said Huawei might soon lose its edge to rival brands.
The US keeps harping that Huawei is a security threat but has presented no proof of its accusations. The only proof presented was NSA hacking Huawei, Cisco, and Juniper gear and spies on Huawei and the Chinese government. Speculation on the reason for the ban is to stop China’s technology rise. Huawei is key in that effort, hence the effort to drag Huawei down. When the trade talks first started, they abruptly stopped because China refused to abandon its ‘Made in China’ initiative that would leapfrog China in technology and Huawei was the tip of the spear in that drive for technology. So, the US government is using its technological mite to stop Huawei. Trump saw the damage to ZTE when it was halted from buying US parts for 7 years thought he would do the same to Huawei to get similar results? But Huawei is not ZTE. Huawei has its own semiconductor design subsidiary called HiSilicon. HiSilicon has over 200 chip designs, all for Huawei products. So, Huawei production was still rising when Trump’s ban on semiconductor equipment supply and products took effect devasting the Huawei’s production
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