US-China tariff tiff has got in Huawei of beating Samsung in smartphone stakes, top brass sigh

Analyst clips 2019 shipments, reckons 3.1% market shrinkage

Huawei may have reassessed its ambitions to summit the global smartphone market by 2020 due to political and economic uncertainty between the US and China.

The master plan for south-China HQ'd Huawei was to follow up its stellar 2018 and, more recently, calendar Q1 shipments – up 44.5 per cent to 58.43 million units – with another record year to claim the top spot from Samsung.

Now it seems as though the campaign run by the US administration against all things Chinese, with Huawei at the centre, has caught up with the company's management team and forced a rethink.

"As the situation has emerged, it is too early to say whether we are able to achieve the goal," said Zhao Ming, president of Honour, one of Huawei's smartmobe brands at a briefing in China.

The US is to "prohibit transactions posing an unacceptable risk to the national security" from August. The executive order was signed mid-May but buyers have 90 days in which to make alternative arrangements in the supply chain. This is seen as providing the foundation on which to completely ban Chinese firms including Huawei and ZTE.

In addition, the US government has been slapping trade tariffs on goods imported from China to America in three separate rounds, starting in October, increasing in January and again more recently.

The sentiments have forced analysts at Canalys to revisit its sales projections for Huawei and the smartphone market. It now expects a total of 1.39 billion units to be shifted in 2019, representing a decline of 3.1 per cent.

The analyst is labouring under the expectation that the US restrictions will be felt strongly by Huawei and will hinder the company's short-term rollouts of phones outside of China.

"We expect the other major smartphone vendors will have short-term opportunities while Huawei struggles," said Rushabh Doshi, Canalys research director. He said Samsung would be the major beneficiary due to its "aggressive device strategy and its ability to quickly ramp production".

"It will take other vendors until late 2019 to react to the new opportunities. Samsung's control over component supply gives it a major advantage," he added.

Beyond this year, smartphone sales are tipped to rise in 2020 by 3.4 per cent to 1.39 billion as the big brands roll out 5G-ready devices. ®

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