Huawei Comes Clean, Implies U.S. Ban Is Dampening Sales

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Huawei has finally stated the obvious: the company will not be able to reach its target of becoming the largest smartphone vendor in the world by the last quarter of 2019. Speaking at the CES Asia technology summit, chief strategy officer of the company's Consumer Business Group, Shao Yang said that the manufacturer now believes that it will take much longer to achieve the goal.

While Yang didn't explicitly mention the U.S. trade ban, he did imply that the company was previously on track to dethrone Samsung, which currently leads the market. The strategy boss also revealed that the Chinese company currently sells 500,000 to 600,000 smartphones every day.

The smartphone market has been in decline for six straight quarters and most vendors, including the heavyweights Samsung and Apple, have seen their shipments take a hit because of the market conditions. Huawei, on the other hand, managed to buck the trend and continued to exhibit spectacular growth.

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The latest estimates from various analytics firms show that the company was within the striking distance of Samsung before the U.S. struck. The Trump administration has put Huawei on its entity list, as a result of which, many companies stateside as well as non-U.S. firms that use U.S. origin technologies have cut ties with it.

Up until now, Huawei had been trying to downplay the ban by implying that it's self-sufficient and the embargo will not affect its business. Of course, the truth is far from this and without important supply chain partners such as ARM, Google, and Microsoft, the company has been essentially left for dead.

For instance, although Huawei makes its own Kirin chipsets, the company still needs ARM and Synopsys for the design process. Similarly, the company's Android alternative will require some time to take off and even then, it will be an uphill task to convince non-Chinese users to manage without popular Google apps and services such as Gmail and YouTube.

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A Huawei executive had earlier mentioned that the company has seen its sale go down in Spain following the ban. Similarly, a report has alleged that the sales of the company's smartphones in Germany have dropped drastically after the blockade. Outside of China, Europe is one of Huawei's most important markets and the company was previously hoping to increase the revenue it generates from there.

A few days back it was also reported that Foxconn, which assembles Huawei's phone, has stopped several production lines as the company has slashed orders for new models. Another report says that the company has downgraded sales forecast by 20 to 30 percent from the previous estimate.

Huawei never had an official presence in the U.S., but some third partly retailers did sell its handsets in the country. However, the Chinese tech juggernaut was still confident that it would become the world's largest smartphone seller by 2020 at the latest.

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Unless the Chinese government steps in and negotiates a deal with the U.S., the company may even lose the second spot as analysts estimate that its sales may go down by a quarter this year if the current situation continues.

Otherwise, Huawei will be confined to the Chinese market in the near future at best.  But then again, this is a very unlikely scenario for a variety of reasons. Firstly, Huawei will not go down without a fight and secondly, since it gets a lot of components from U.S.-based companies, America can't afford to lose it as a client.