The logo of the Chinese company Huawei in their main UK offices in Reading, west London, on January 28, 2020.
Daniel Leal-Olivas | AFP via Getty Images
Huawei became the world’s largest smartphone player in the second quarter for the first time, a new report from Canalys shows.
Most of the sales came from China because its international business suffers from US sanctions.
The Chinese vendor shipped 55.8 million devices, down 5% year-over-year, according to the research firm. Meanwhile, the second place that Samsung sent 53.7 million smartphones, 30% plunge against the same period last year.
It is the first time Huawei has set the top spot for one quarter, an ambition it has had for many years.
But analysts have questioned whether this was sustainable due to the fact that Huawei’s overseas markets outside China have been successful as a result of U.S. sanctions against the company.
Huawei sold more than 70% of its smartphones in mainland China in the second quarter. Meanwhile, smartphone shipments to international markets rose 27% year-over-year in the April-June quarter.
In Europe, a key region for Huawei, the company’s smartphone market share fell sharply to 16% in the second quarter versus 22% in the same period in 2019, according to Counterpoint Research. It is the third largest smartphone maker in Europe after Samsung and Apple, showing how Huawei’s global position in the second quarter of the year was built on efforts to expand its stake in China, the world’s second largest economy.
Due to China’s massive population, success has often stretched companies toward a large “global” market share.
“It will be difficult for Huawei to maintain its long-term advantage,” Mo Jia, an analyst at Canalys, said in a press release. “Its channel’s key partners in key regions, such as Europe, are increasingly wary of Huawei’s range of devices, taking fewer models and introducing new brands to reduce risk.”
“Power in China alone is not enough to sustain Huawei at the top once the global economy begins to recover,” he said.
Last year, Huawei was placed on the U.S. Entity List, a blacklist that limited its access to U.S. technology. This meant that Huawei could not use Google Android licensed on its latest flagship devices.
In China, where Google services like Gmail or its search engine are effectively blocked, it’s no big deal because Chinese consumers aren’t accustomed to using those products. However, in international markets, Google does not have a big blow.
This is one reason why Huawei’s rivals, who are still able to use Android on their devices, have grown into market share. For example, in Europe, Chinese firm Xiaomi saw its market share increase from 6% in the second quarter of 2019 to 13% in the same period this year, according to Counterpoint Research.
Huawei was forced to release its own operating system called HarmonyOS last year. But analysts have previously cast doubt on its success in international markets due to the fact that it is missing key apps from the App Store.
The Chinese telecommunications giant has faced further pressure this year from Washington. A new rule introduced in May requires foreign manufacturers who use U.S. equipment to make the chips obtain a license before they can sell semiconductors to Huawei.
This could affect Huawei’s ability to acquire chips for its smartphones. While Huawei designs its own processors, they are manufactured by Taiwan’s TSMC that may be affected by this rule.