Huawei’s smartphone production faces 10% drop in 2020

Huawei’s smartphone production for 2020 will drop by 10 percent to around 170 million units as compared with the earlier projection of 190 million units, according to TrendForce’s latest analysis.
Huawei P30 smartphone
The downward revision in forecast is based on sanctions imposed on Huawei by the U.S. Bureau of Industry and Security on August 17.

The sanctions indicate semiconductor components containing U.S.-originated technologies or software from September 15 onward will not be shipped to Huawei without permission from the U.S. Department of Commerce.

TrendForce indicates that Huawei has been amassing a strategic reserve of components from U.S. suppliers since 2019 in hopes of lessening the impact of the tightening trade restrictions on its device production later on.

Chinese competitors including Xiaomi, OPPO, and Vivo may benefit from Huawei’s lowered production. At present, Xiaomi, OPPO, and Vivo are increasing their production targets while aggressively stocking up on components to capture more market share in China. Xiaomi has been the most aggressive in procuring components, followed closely by OPPO.

Huawei is expected to maintain a 14 percent market share for 2020 and the other brands are unlikely to increase their market shares significantly. The market shares of Xiaomi, OPPO, and Vivo this year are projected to reach 12 percent, 11 percent, and 9 percent, respectively.

Huawei is also facing the challenge of limited semiconductor production capacity. Because of the tight grace period during which Huawei’s suppliers may ship to the company, it may face potential shortages in components such as processor chips, panel components, and camera modules.

The global smartphone market is expected to increase by 9 percent in terms of production volume for 2021, according to TrendForce.

The recent IDC report said the smartphone market is forecast to decline 9.5 percent in 2020 to 1.2 billion units. IDC expects a strong 5G smartphone demand is expected to bring the market back to growth in 2021 and the smartphone market will return to a full recovery by 2022.