Beleaguered Chinese telecommunications giant Huawei said on Tuesday that “survival” will be the top priority in 2020 as it battles a prolonged US sanction. The company fell short of its 2019 targets as revenue growth slowed in the latter half of the year, said Eric Xu, Huawei’s rotating chairman, in a memo to the company’s 190,000 employees.
Huawei estimates its sales revenue to grow 18 percent year-on-year (YoY) to reach 850 billion Chinese yuan ($122 billion) in 2019. This may not sound particularly bad, but the company’s YoY growth rate in the first half of the year was at around 23 percent. The decline in the second half means Huawei missed its internal targets for the year. The company was aiming to generate sales revenue of $125 billion in 2019.
Huawei also shipped 240 million smartphones in 2019, a 16.5 percent jump from 2018. According to the latest data from IDC, the company’s global smartphone shipments grew by 28 percent in Q3 2019. Though it was largely driven by strong domestic demand, where Huawei had a market share of more than 40 percent, this helped the company close the gap with Samsung.
If not for the US sanctions, Huawei would have topped the South Korean behemoth to become the world’s largest smartphone vendor in 2019, said Richard Yu, CEO of the company’s consumer business group, in a separate memo.
Survival will be the first priority
Huawei knows that things are only going to get worse from here. “We won’t grow as rapidly as we did in the first half of 2019, growth that continued throughout the year owing to sheer momentum in the market,” said Eric Xu. “Survival will be our first priority.”
He has called on everyone associated with the company to get rid of complacency and hone the ability to fight. Starting next year, Huawei will remove ten percent of the worst-performing managers every year. High-performing employees will be rewarded, while some employees could get re-assigned to other divisions. The company may also merge or downsize some of its operational units.
Huawei is also betting on 5G to aid its business next year. “2020 is when we’ll see 5G take off on a major scale, even as the AI era arrives,” said Yu. “Uncertainty will increase next year, and that’s when our real test will begin.”
Huawei looks to become self-sufficient
Huawei’s smartphone unit has been hit the most by the US sanctions. Washington has barred US companies from selling software and components to the Chinese company without a license. This locks Huawei out from access to the Android operating system and other Google services. And without the latest Android version and Google apps and services, including Google Play, Maps, and Gmail, it’d find it difficult to sell phones outside of China.
Going forward, Huawei is looking to become self-sufficient in several areas, including semiconductors and software. The company already has an operating system in development. It is planning to launch several smartwatches, speakers, virtual reality gadgets, and smart TVs loaded with the new Harmony OS in 2020.
Huawei also offers its own mobile apps ecosystem, known as Huawei Mobile Services. It currently serves 400 million monthly active users, Richard Yu said. It’ll be interesting to see how Huawei copes with this US trade ban next year.