Huawei Technologies has notified its suppliers that its smartphone component orders will fall by more than 60 per cent this year, Nikkei has learnt, as US sanctions continue to bite.
Huawei has notified suppliers that it plans to order enough components for 70m to 80m smartphones this year, according to people at multiple suppliers. The range represents a more than 60 per cent decline from the 189m smartphones Huawei shipped last year.
The company’s component orders have been limited to those for 4G models as it lacks US government permission to import components for 5G models. Some of the suppliers indicated that the figure could be lowered to about 50m units.
The embattled Chinese tech giant last year fell to number three in the global smartphone industry, behind Samsung and Apple, according to research company IDC. Huawei is likely to lose further ground this year given the US export restrictions. Huawei declined to comment.
Huawei in November sold its Honor budget brand to a consortium of more than 30 Chinese companies in a bid to help Honor regain access to critical components and parts subject to the US restrictions.
Honor says it has resecured business relationships with key suppliers, including AMD, Intel, MediaTek, Micron Technology, Microsoft, Qualcomm, Samsung, SK Hynix and Sony. It launched its V40 5G smartphone in China last month.
While some of Huawei’s suppliers have obtained permission from the US commerce department to ship parts, the company still lacks access to core components for 5G models.
There have been news reports that Huawei may sell its mobile phone business altogether.
Asked about this, Ren Zhengfei, Huawei chief executive, told a media outlet that he would “never” take that path.
This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, the economy, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan.
But, according to an executive at one supplier, Huawei has not been able to procure the necessary components. Global semiconductor and component shortages are also weighing on Huawei’s smartphone business.
There were hopes in China that Joe Biden, who took over as US president from Donald Trump in January, would ease off his predecessor’s hardline approach to China trade, including in regard to semiconductors and related equipment. But it now appears that the new administration will maintain Trump’s combative stance.
Gina Raimondo, the US commerce department secretary nominee, said in early February that she saw no reason to remove blacklisted companies from the department’s Entity List because most were included on it for national security or foreign policy reasons.
Additional reporting by Lauly Li and Cheng Ting-Fang in Taipei
A version of this article was first published by Nikkei Asia on February 18, 2021. ©2021 Nikkei Inc. All rights reserved.