Back to basics for Huawei as China remains the bedrock of success

Pretty much everyone in the technology world knows Huawei is under pressure, though with its dominance of the Chinese market, it has more than enough to weather the storm.

According to new estimates from IDC, Huawei has now officially become number one in the market share rankings for tablets in China. These estimates follow smartphone shipment figures which demonstrate extraordinary dominance from the under-fire firm.

Over third quarter of 2019, Huawei shipped 2.12 million tablets, up 24.4% from a year ago, to take 37.4% of the total market. It has leap-frogged Apple to lead the market, the iLeader currently controls 33.8% of shipments, while the rest of the field are no-where near the leading two. Xiaomi currently sits in third position, with market share of 5.9%, a decrease of 47.4% year-on-year.

Although increased tablet sales in China are not going to compensate for the troubles which Huawei are facing in the international markets, alongside the smartphone dominance during the same period, it demonstrates the comfortable position Huawei is currently in.

Talking of smartphone shipments, as you can see from IDC’s figures below, the strong market share position is duplicated.

2019 Q1 2019 Q2 2019 Q3
Shipments (Million units) 29.7 36.3 41.5
Market share 35.5% 37% 42%
Year-on-year growth 40% 27% 64.6%

And even with heavy criticism from the White House, Huawei is maintaining its position as the leading network infrastructure vendor worldwide. In the third quarter, Dell’Oro estimate Huawei owned 28%, though some might suggest this is due to its dominance of the Chinese market. The firm has been missing out on valuable contracts in some European markets though it doesn’t seem to be having a disastrous impact.

Noise from the White House might be starting to have an impact on the Chinese vendors influence on certain Western markets, but let’s not forget how Huawei created such a dominant position in the first place.

Some might suggest the dominance of Chinese companies on the Chinese market is only due to an uneven playing field, Western challengers might be handicapped when it comes to competition, but this is largely irrelevant. This is not a situation which is likely to change in the future, regardless to the number of complaints, therefore it should be accepted.

This dynamic afforded Huawei the confidence to aggressively expand in bygone years, and it will continue to be a comforting thought as uncomfortable aggression floats both directions out of the US.

With continued dominance in the Chinese smartphone, tablet and network infrastructure segments today, Huawei has firmed up its bank accounts. The spreadsheets will not be under anywhere near as much threat as they potentially could have been, as the management team can rely on revenues continue to flow through the domestic market. This is the same position Huawei was in prior to its international expansion.

Huawei is not necessarily a Chinese company anymore. Yes, it was founded in China and the country continues to house its headquarters, but this an international beast with considerable influence around the world. The management team will not be happy its international revenues are being eroded, though the Chinese domestic market can prop this giant up; it is that big.

Irrelevant to the amount of noise coming out of the White House, and regardless of the success it has in convincing its allies to ditch Huawei as a vendor, it will always have the Chinese domestic market to lean on. And as long as it is still one of the country’s leading companies, it will always have the opportunity to expand aggressively internationally. It just has to wait for the anti-China rhetoric to die down, like it did in the early 2010s.

US on the verge of signing some kind of trade deal with China

US Commerce Secretary Wilbur Ross has said his country is close to signing a deal with China that could lead to an easing of some trade restrictions.

Ross (pictured) said as much to Bloomberg, with the usual caveats about nothing being set in stone. Many media have been reporting their own conjecture about what this could mean for Huawei as fact, but Ross was keen to stress this deal doesn’t affect the ‘entity list’, which prevents US companies doing business with Huawei.

There was some couched optimism about licenses being granted, that would enable specific companies to conduct specific trade with Huawei, but then again the US has been sitting on a bunch of license applications for a while without apparently granting any. Arguable the biggest of these would be one that allows Google and Huawei to work together, thus enabling the latter to install the full version of Android on its phones.

It’s all very well for Ross to insist the entity list and the trade war are unrelated, but US foot-dragging over granting those licenses implies the contrary. Trade wars are a game of chicken in which each side raises the stakes to give them more weight in negotiations. Putting national champion Huawei in existential danger via the entity list is just too convenient a negotiating chip for its to be plausible that the two issues are unrelated.

 

CTA suggests Trump’s tariffs doing more harm than good

The Consumer Technology Association (CTA) has labelled the logic behind President Donald’s Trump’s trade strategy with China as a “one-step-forward, two-steps-back” approach.

The current resident of the White House certainly does polarise opinion, though the CTA is claiming the strategies in play during trade talks with China are having a negative impact on the consumer. With an election looming large on the horizon, if the idea of Trump hitting the US wallet consumer gains traction, it could prove to be a very damaging piece of rhetoric.

“The tariff delay on $250 billion worth of Chinese goods is welcome news for American businesses and consumers – but a one-step-forward, two-steps-back approach means US businesses will continue to struggle under the burden of tariffs and uncertainty in supply chains,” said Gary Shapiro, CEO of the CTA.

“American businesses thrive when they can dedicate their time and resources to innovating and competing globally, not checking Twitter for trade policy updates and combing through HTS codes to find which products are facing higher taxes. We’re encouraged by the progress from today’s round of trade talks and hope that President Trump will stop using tariffs as a weapon during this Phase 1 agreement.”

According to estimates from the CTA, US consumer tech companies paid an additional $1.8 billion on tariffs in August alone, with $124 million on products critical to 5G deployment. Considering these figures are only focusing on a single month, and 5G network deployment is not scaled to mass market just yet, the bill is likely to be eye-wateringly higher in the future.

Although Trump’s approach to Chinese trade negotiations has been criticised by industry, the consumer has not necessarily been involved in the argument. And why should it? Trade talks are something which happen in the background without the ‘man on the street’ being too bothered in the past, though there is a different element to consider here; if wallets start to get impacted, the very citizens Trump is supposed to be protecting from the evil communists might start to get a bit irked.

Citizens are consumers after all, and in a consumer-driven society, cheaper is usually better. There will of course be homage paid towards quality, though this can only be drawn out so far. Consumers have gotten used to paying less and getting products right now. Being asked to pay more for the dubious claim of national security might not sit well with some.

According to the same data presented by the CTA, the tariffs have the consumer technology an additional $14 billion since they were first introduced in July 2018. $1.3 billion can be attributed to 5G-related products. These costs derived from a more expensive supply chain will be eventually passed onto the consumer.

What is worth noting is that there is probably worse to come if the President decides this approach to negotiations is proving successful. And we suspect from the tone of statements and tweets, the inner-circle of US politics are very much committed.

This is perhaps one of the worst elements of the current saga for US business, the idea of uncertainty. If these companies knew exactly what was going to happen, changes could be made to the supply chain. It might cost a little more, and while this is not ideal, operational efficiencies could be driven elsewhere. Knowing that there is something terrible on the horizon is much better than it popping-out from behind a tree.

The risk of the unknown, and a political leader who seemingly reads the Beano for strategic inspiration is likely to make many businesses very nervous.

Creating a competitor will only help us – Huawei CEO

In the latest edition of ‘A coffee with Ren’ the Huawei founder graced a wide range of topics from data protection to 6G, but perhaps the most important area was the licensing idea which has been floated.

It is an interesting thought. Huawei founder Ren Zhengfei is prepared to license the technology which has fuelled the vendors drive towards the top of the connectivity ecosystem, to create a competitor. And just any competitor, one from the US, the very country which is driving the misery and headaches in Shenzhen.

For some, actively creating a competitor might be considered somewhat of a risk, but this is not how Ren see things.

“First, we will get a lot of money from the licensing,” said Ren. “That will be like adding firewood to fuel our innovation on new technologies. It will mean that we will have a better chance of maintaining our leading position.

“Second, we will bring in a strong competitor. This will prevent our 190,000 employees from becoming complacent. They’ll know that if they sleep on the job, they might wake up and find they have lost their jobs.

“Sheep become stronger when they are chased by wolves. I don’t worry that a strong competitor will emerge and drag Huawei down. In fact, I would be happy to see that, because this would mean that the world is becoming stronger.”

This might sound like a corporation putting a brave face on an uncomfortable situation, but there is some logic to it.

Ren has suggested the new competitor should probably be a US firm, as Europe already has its own vendors in this space. This presents a very interesting opportunity for Huawei. Presumably, a US vendor would have an excellent opportunity to secure valuable contracts with US telcos. If you have a look at the vendors activities in their own domestic markets, they are generally very successful.

Should this presumption prove accurate, Huawei won’t be making money directly from the US market, but through license fees, it will secure indirect revenue. The more successful this company is, the more revenue Huawei can realise through licensing.

The US is an incredibly large and lucrative market for network infrastructure vendors and Huawei has been almost non-existent to date. It might have secured contracts with some of the regional telcos, but these are not the riches which are promised in the ‘Land of the Free’. Huawei will be making money somewhere it has never really made money before. Suddenly, the licensing plan starts to look like an understated but clever move.

The technology will be licensed to the exclusive partner on fair, reasonable and non-discriminatory (FRAND) terms, with the team offering everything associated to 5G. That means software source codes, hardware designs, production technologies, as well as network planning and optimization and testing solutions, as well as chip design technology.

Although the company which undertakes this license will go toe-to-toe with Huawei on a technology basis, it will also have to prove it can support customers in the same way.

One of the reasons Huawei has been a success in recent years isn’t simply down to the technology. CTOs and network executives have noted to us that the support offered to customers post-sale sets the vendor apart, while the team is more open than most to consider customisable solutions to meet the unique demands of each vendor. This attention to detail is one of the reasons Huawei is perhaps considered the leader in the market.

Overall, this is of course a way to ease the tension between the White House and Huawei. We suspect this will not have much of an impact on the overarching trade-war between the two global super-powers, however that is of little concern to Huawei. This is a commercial organisation. It matters little if there is political conflict overhead, just as long as the company is not drawn into the saga.

The big question which remains is whether this will appease the aggression of the US.

The attraction of gaining more traction in the network infrastructure space might well be a tempting offer to disperse the aggression. The US is a company which wants to control the 5G ecosystem after all, as does pretty much every country. This is perhaps one of the contributors to the tension between the US and China.

As Ren pointed out during the coffee session, the saga does need to be resolved before more powerful technologies are being discussed in wider society.

“5G is not that amazing; its power is exaggerated by politicians,” said Ren. “AI will have an even brighter future. I hope we will not be added to the Entity List again in the AI era.”

Huawei is not the biggest and best software company around (just yet) therefore we cannot see the company taking a lead in the AI-era. It’s heritage and excellence primarily lie in the hardware, however it is a risk should the tension continue to remain at a stalemate between the two global superpowers.

Micron earnings devastated by US/China conflict

Micron Technologies unveiled fourth quarter and full-year financials for 2019, with the on-going tension between the US and China shattering the spreadsheets with distressing effect.

The company, which is a US producer of advanced semiconductor products, is one of the unfortunate victims of the US/China trade war. Like many other technology companies who are a supplier to Huawei, the on-going saga is having a catastrophic impact on financials. Unless there is a resolution on the horizon, Micron could look like a very different business in the very near future.

“We have applied for licenses with the Department of Commerce that would allow us to ship additional products, but there have been no decisions on licenses to date,” said CEO Sanjay Mehrotra during the earnings call.

“We see ongoing uncertainty surrounding US China trade negotiations. If the Entity List restrictions against Huawei continue and we are unable to get licenses, we could see a worsening decline in our sales to Huawei over the coming quarters.”

A word of warning for those who do not like are of a delicate disposition, the numbers being quoted below are not pretty.

Total revenues for the final quarter of 2019 stood at $4.87 billion. This is a slight increase quarter-on-quarter, but down roughly 43% compared to the $8.44 billion brought in for Q4 2018. Net income came to $561 billion for the three-month period, compared to $4.33 billion in the same period of 2018.

For the full-year, revenues stood at $23.406 billion compared to $30.391 billion across 2018, while net income dropped to $6.313 down from $14.135 billion.

President Donald Trump might well be pursuing national security, assuming you believe the statements, though that will come as little comfort for any of Micron’s employees, investors or suppliers.

Mehrotra has attempted to put as positive a spin as possible on these results, but it is a very difficult sell. The markets are looking positive for the business if you ignore the omission of Huawei as a customer, but it is very difficult to avoid the fact the company will make less money if it is not allowed to do business with the Chinese firm.

What is worth noting is that the business is slightly prepared for this nightmare scenario. The team have put in the work to prepare the organization, and as such, Micron actually delivered beyond analyst expectations for the quarter. That said, with share price declining 9.5% since the earnings call, it is clearly not a favourable position.

And Micron is not alone in this sticky position.

Skyworks Solutions, a supplier of semiconductors to Huawei, reported revenues of $767 million during the latest financial results, compared to $894.3 million in the previous year. The decision to ban work with Huawei only came a few weeks prior to this earnings call, and we suspect the financial hole will be substantially bigger come the next time Skyworks Solutions addresses investors.

Finisar is another US firm which saw revenues decrease to $285 million from $317.3 million year-on-year owing to challenging macro-economic environment. Qorvo is one firm which has seemingly survived the first waves of conflict, though it is forecast to have an impact soon enough.

“Ultimately, we were able to begin shipments of certain products [To Huawei] late in the quarter and we have applied for a license to expand the products we can sell,” Qorvo CEO Robert Bruggeworth said during the earnings call in August.

“We will continue to support them consistent with all applicable legal requirements. Finally, as our June quarter and September guidance demonstrate, we are effectively navigating a challenging environment and our products and technology continue to support solid sustainable results.”

Qorvo is forecasting revenues of $745 million to $765 million during the three-month period we are currently in. This would compare to $884.4 million which was brought in for the same quarter of 2018, prior to the Huawei misery.

And while these companies are applying for licences to work with Huawei while simultaneously praying for an end to the conflict, the chaos might continue well into the future.

Huawei founder Ren Zhengfei has recently said Huawei has begun the production of 5G base stations which do not contain any US component.

“We carried out the testing in August and September, and from October on we will start scale production,” Ren said.

This is something which should be viewed as worst-case scenario for everyone involved from the US side of the conflict. If you are of a sceptical nature and believe the tension has been heightened by Trump as a means to demonstrate US power to gain an edge in trade talks, Huawei surviving is a bad outcome. Another bad outcome is Huawei surviving and then restructuring its supply chain to removal any US suppliers.

Ren has initially said it would start production of base stations free of US components immediately, targeting 5,000 a month. Huawei is currently targeting the production of 600,000 base stations this year, scaling up to 1.5 million in 2020, though it is unknown how many of these will be with or without US components.

If Huawei can operate without any US suppliers in the supply chain, then it becomes a much more stable company. It is also an outcome which would please the Chinese Government considering the ‘Made in China 2025’ plan. This strategy aims to move China away from being the world’s ‘factory’ and move to producing higher value products and services.

And finally, onto President Trump, this is a disastrous outcome. The White House perhaps implemented this aggression towards Huawei to make the company falter and demonstrate power. If Ren is to be believed, Huawei will have negotiated the turbulent times and come out the other side without the need for US suppliers. The quality of the supply chain alternatives remains to be seen however.

Prior to this chapter of the saga, US firms were making profits from Huawei’s success; this might not be the case anymore.

iPhone gets the official nod of approval for tariff exemptions

For those who are facing uncertainty over the potential introduction of tariffs on products and components originating in China, the confirmation of Apple’s exemptions will perhaps rub salt into the wound.

Although the idea of preferential treatment is a stretch, a lot of good things do happen to Apple. With new tariffs looming on the horizon, Apple has received approval for 10 of the 15 applications it made for exemption. Details are thin on the ground for the moment (the US Trade Representative website had crashed at the time of writing), the damage which would be inflicted on the iLeader’s Mac Pro computers.

Dedicated Apple followers will now breath a sigh of relief as the prospect of increased costs being passed onto the consumer are much lower. Apple will have to swallow some additional costs, not every application was approved, but the impact will now be limited.

The Apple issue is a relatively complicated one. Although the Mac Pro products are assembled in the US, many of the components are manufactured in China. For example, partially completed circuit boards are imported to a plant in Texas for the final product to be assembled.

Texas does appear to be an interesting element in this story…

On July 26, President Trump tweeted “Apple will not be given Tariff waiver, or relief, for Mac Pro parts that are made in China. Make them in the USA, no Tariffs!”, before going onto explain the next day that Apple was considering opening a manufacturing plant in Texas as a means to avoid the financial penalty. The claims followed meetings between the President and Apple CEO Tim Cook, but Apple is yet to make any announcement which would resemble what Trump is claiming.

In fact, during the last earnings call, Cook suggested the tariffs presenting a significant problem for Apple. The current set-up was not necessarily feasible, with some fearing these comments meant production could be moved out of the US completely.

Much of Apple’s manufacturing supply chain is currently located in China. One reason for this will be the cost of labour, land and local materials, but it is worth noting that China has skillset which cannot be replicated in the US. China is a hotbed for the worldwide manufacturing industry, and such, careers like Precision Tooling have thrived while they have suffered elsewhere. Sourcing talent outside of China is as much of a supply chain headache as swallowing the cost is.

While an unknown number of companies will be sweating over the seesawing nature of the US/China trade relationship and potential tariffs, Apple seems to be coming out unscathed at each turn in the road. With these exemptions, and the delay of the tariffs which would have impacted the production of the iPhone, the Apple lobby seems to be working very effectively.

US gives Huawei back some gear it nicked two years ago

In September 2017 US authorities confiscated a bunch of Huawei kit on its way from California to China and has only just returned it.

The only account we have of this is from Huawei, but that’s at least in part because the US has been very reticent about explaining many of its actions regarding Huawei. The servers and networking gear had been in a California lab to undergo commercial testing and certification. When it was in the process of being returned the US Commerce Department seized it, citing unidentified export violation concerns.

By June of this year Huawei decided to take legal action to get its property back and, as if by magic, the US decided to return it, once more without explanation, according to Huawei. “Huawei views the decision to return the technology as a tacit admission that the seizure was unlawful and arbitrary,” said Huawei in its announcement, which also revealed that the lawsuit has been dropped as a consequence.

“Arbitrary and unlawful government actions like this – detaining property without cause or explanation – should serve as a cautionary tale for all companies doing normal business in the United States, and should be subject to legal constraints,” said Dr. Song Liuping, Huawei’s Chief Legal Officer.

Presumably the US wanted to inspect the gear to see if it could find any evidence of IP theft, Chinese spy gear, or whatever. If so then it should have followed that same due process it would have applied to US companies, such as just cause, legal representation, etc. Every time the US abandons due process while at the same time accusing Huawei of illegality it undermines its own position.

Huawei reportedly reckons it has an Android ban workaround

At a recent trade show a Huawei exec indicated that there may be a way to enable its future smartphones to access Android apps despite Google being banned from working with it.

The goss comes from Android Authority, which attended the launch of the Huawei P30 Pro at IFA in Germany. At the launch the head of Huawei’s consumer business group Richard Yu apparently told reporters he has a cunning plan to get around the catastrophic consequences of not longer having google support for Android.

While Android itself is open source and anyone is free to install their own take on it, the Play Store and Google apps such as Gmail. Maps, etc are all licensed from Google and can’t be installed on a phone without that license. If and when the US stops suspending the sanctions that come with Huawei being put on its entity list, Google will be barred from entering into further licensing agreements with Huawei.

An Android phones without Google apps and the Play Store is not worth having. There are already signs of Huawei having to adapt to that eventuality, with the P30 Pro featuring the EMUI 10 user interface that is ‘based’ on Android 10. The extent to which it deviates from Android 10 to the detriment is unclear.

In reference to the imminent launch of the flagship Mate 30 smartphone, Yu said Huawei is working on a way of letting users install Google apps on the non-official version of Android. He even went so far as to say that the process would be quite easy for users, without going into details. Even if that’s true, however, with there being so little to choose between flagship Android smartphones when it comes to hardware specs, there would still be little incentive for punters to accept any user experience compromise, so even this hope may be forlorn.

Huawei hits back, claiming US is threatening its employees

Perhaps this is the first hint of a new media strategy from the under-fire vendor as Huawei suggests the US Government is encouraging threats and menace to turns its employees against it.

Although this is only a single act, it is a very different approach to how Huawei has been managing the drama through the last 12 months. This is maybe the position it has been forced into by White House aggression; it might have to start fighting fire with fire.

In a statement, Huawei has suggested the US Government has been “instructing law enforcement to threaten, menace, coerce, entice, and incite both current and former Huawei employees to turn against the company and work for them.”

In shining a light on the bullying tactics of the US Government, perhaps the executive team is looking for sympathy from friendlier nations or for someone to step-in and suggest the actions are not proper. The US Government certainly won’t be shifted from its current course through social embarrassment but calling attention to the strategy it might sour the relationship between the US and other nations around the world.

Aside from encouraging government agencies to act through ‘unscrupulous means’, Huawei is also suggesting the US is:

  • Unlawfully searching, detaining, and even arresting Huawei employees
  • Launching cyber-attacks against the firm
  • Coercing other companies to bring unsubstantiated accusations against the company
  • Attempting entrapment
  • Obstructing normal business activities and technical communications through intimidation, denying visas and detaining shipment

Although it isn’t entirely clear what the desired outcome of this statement actually is, it is a new approach. To date, Huawei has sat back and absorbed the abuse. Its messages have focused on proving its own innocence, as opposed to tackling its opponent. Perhaps this is about to change.

With this statement, Huawei is calling attention to the less attractive traits of the US. It might consider itself as the front-line of defence, the world police in some people’s eyes, however it can also be viewed as a bully. Not only would many deem this inappropriate, if some of the claims above prove to be true, the White House might well be acting illegally.

President Trump’s administration certainly does things differently from those who have previously inhabited the White House, though the jury is still out on what this actually means. Some like the fact Trump is shaking up politics, some suggest he is an embarrassment to a privileged position of responsibility, a shambolic disaster who stumbles from one inappropriate statement to the next calamitous action.

It does seem there is an element of the ‘straw which broke the camel’s back’ here.

This chapter of the on-going saga is focused on a patent dispute with Rui Pedro Oliveira which has now being going on for two years. Circling around the development of a camera design included in Huawei smartphones, the Department of Justice has launched an investigation as a result. Huawei believes Oliveira is taking advantage of the geopolitical climate and the US Government is jumping on another opportunity to swing the stick at the firm.

Perhaps this will be the beginning of a new media strategy, drawing the attention to the US’ ugly traits. This Presidential administration has certainly taken a more combative, bullying approach to international relations, though we suspect it will not be too bothered by the Huawei statements. That said, other governments might take notice and start getting irked by the continued campaign of hate and ‘unpresidential’ actions.

Google writes opening line of Huawei smartphone obituary

Huawei’s next flagship smartphone will not feature official Google applications as the weight of the US ban finally hits home.

Speaking to reporters in the US, and first reported by Reuters, a Google spokesperson said the Huawei Mate 30 rumoured to be launched in October, cannot be sold with licensed Google apps and services. This is a significant setback to Huawei’s consumer division and begs the question as to whether anyone would now consider the devices without the Android OS and supporting app ecosystem.

The blow from Google of course leads back to the White House. In entering Huawei and its affiliate companies on the Entity List, US suppliers are banned from supplying any products, components or services to the Chinese vendor. This includes Google, with its horde of popular applications and platforms.

There has of course been a moment of reprieve for some US suppliers. President Trump said there will be an extension on the ‘grace period’ afforded to Huawei and its US supply chain, though Google has now stated this only applies to devices which are already on the market. As long as the conflict between Beijing and Washington persists, it looks like the new Huawei devices will have a Google-shaped hole in them.

Although Google has not confirmed whether it has applied for an exemption from the ban, it has said in previous months it wishes to continue working with Huawei. Of the 130 applications sent to the US Commerce Department to seek a special licence to continue working with Huawei, none have been accepted thus far.

This is of course not as simple a situation as one might expect. Google owns Android, the open-sourced operating system. Huawei is not banned from using Android, it can’t be, but it is banned from being an official Android partner of Google. This means it will not be entitled to security and performance updates as soon as there are available. It can use the basic Android building blocks, but it will effectively have to build its own OS, which it has pretty much already done, but it will be a completely different product.

The confirmation from Google here is the news many Huawei fans will not want to have heard. The Mate 30 will not feature popular applications such as Google Maps, or the Goole Play Store where users can download other apps. These are only two examples, though they are critical elements of any Android smartphone.

The question which remains is whether anyone will buy a Huawei smartphone now?

We suspect not, assuming they have kept up-to-date with developments or done the slightest bit of research. There will of course be a market for Huawei in China, there is a sense of patriotism there propping up the business, though this could be the beginning of the end for Huawei in Western (perhaps all international?) markets.

A Google-less future is the new status-quo for Huawei, and unless this changes quickly, we suspect its smartphone business will be a shadow of its former-self in a very short period of time.

For those who have been plotting and scheming the downfall of Huawei, this is the first sign of success. For months, the Chinese vendor seemed to be immune to the collateral damage from the US/Chinese trade-war, though now it has finally hit home.

The consumer business unit has been very kind to Huawei executives over the last couple of years. Thanks to the creation of consumer devices which performed well and were reasonably-priced, and an extensive above-the-line advertising campaign to drive the Huawei brand, Huawei has become one of the most popular consumer electronics brands worldwide. It has consistently been the number two smartphone brand for shipments globally in recent years, while the consumer business group is now the largest contributor to group revenues at the firm.

In its recent financial statement, Huawei reported another year-on-year revenue increase, though it did appear growth in the smartphone business was driven by domestic smartphone sales. Research from Canalys suggests smartphone sales in Western Europe were down for the second quarter by 16%, with Samsung and Xiaomi benefitting. Unless the situation changes, we cannot see anything but a dramatic decline in Huawei smartphone sales in Western markets, and perhaps this misery will spread to all of Huawei’s international market.

This is currently an incredibly profitably and valuable business to Huawei executives and shareholders, though now it appears it has been cut-down at the knees by the White House and the Trump administration.