Huawei's US Ban Isn't Stifling Its Revenue Increases

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Huawei revenue is up thirty percent in the first half of 2019 despite the US Ban in mid-May according to a new report.

Huawei's revenue declined 9% from the first three months of 2019 but is up from 2018. The Shenzhen-based corporation managed to survive the financial ban from US President Donald J. Trump by way of securing necessary mobile device components such as silicon chips from Chinese manufacturers, who charge much less than their American counterparts. Additionally, rumors said that Huawei stored three months of mobile components to use in the event of a US Ban on the company.

Huawei's biggest boon to its business is the addition of new 5G network deployment clients, a list that continues to grow despite the US ban on Huawei's presence in America's 5G network rollout. Huawei is one of the world's largest 5G players, with the company owning 15% of all standards-essential patents on 5G technologies. Huawei owns more standards-essential 5G patents than No. 1 phone maker Samsung and the United States.

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The United States has been telling its allies and nations worldwide to prevent Huawei from deploying 5G networks in their respective countries, though with mixed results. Some countries, allied with the US, have followed suit, barring Huawei from network deployment. Others have taken a more critical eye to the US for suggesting that Huawei be barred from network deployment because of their Chinese citizenship and ties to Beijing.

The report coming from Bloomberg looks positive for Huawei, but Bloomberg has done its share of accurate reporting on Shenzhen's Pride; consequently, the report shouldn't be taken as an indication that Huawei is thriving in the midst of the Trump Ban. In actuality, Huawei has only been under the ban for six weeks out of the first six months of the year — a small percentage of the first half of the year, so small that the financial impact of the ban hasn't had time to truly sink in just yet.

Next, Huawei has suffered financial loss, despite the small 9% margin drop from the first three months of the year. Since the Trump Ban, Huawei has experienced 40-60% smartphone sales decline in Europe, its largest market outside China. Germany and Spain have led the way in declining Huawei smartphone sales, as European customers turn elsewhere in Android to replace the banned company.

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Huawei has also saved funds to some extent. It has relied on Chinese makers for mobile components instead of paying the rather high prices of American companies. Huawei has released few mobile devices since the ban, including the MateBook laptop refresh that was due out this year.

Huawei once said it would release its Mate X foldable this year, but then turned around and blamed Samsung's Galaxy Fold flaws for its failure to release its own foldable smartphone. Of course, whispers continue to say that Huawei intends to release the Mate X foldable, despite the company's hesitancy up to this point.

Huawei has released its new Nova smartphone series, though, but in China, along with the Mate 20 X 5G, headed to China this Friday, July 26th. Huawei's few device releases since the ban have been in China, a market where Huawei is the "favorite son" who not only secures government subsidies from Beijing but is also a favorite of Chinese citizens. Huawei's huge market in China and its growing popularity there explains why it will still have a good year despite the American ban.

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Huawei is expected to lose $30 billion over the next two years, according to CEO Ren Zhengfei. So, with that said, the ban won't be felt until some months down the road. And yet, Huawei is already starting to feel the effects of it.

The company first threatened Google about losing 800 million users if Huawei departed from Android; now, Huawei has done an about-face, stating that it wants to remain in partnership with Android and Google. HongMeng, touted to be Huawei's mobile escape, is now being treated as nothing more than an IoT business solution instead of a mobile operating system for what's next.

Huawei can sell 200 million smartphones in China, but it sells next to none in the US and is seeing sales decline in Europe. Its survival will come from China, though how it will survive the Android license revocation by Google, due to take effect on August 19th, is another story. Huawei's complete reversal in its attitude toward Google is expected: when Android is your cash cow, you can't afford to just leave it willy-nilly.

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On August 19th, though, Huawei just may not have a choice in the matter.