According to certain Asian media, Huawei may only manufacture up to 50 million smartphones in 2021. This is but a logical development of the intensifying American embargo where Google Play cannot be pre-loaded onto Huawei devices. However, is this a reflection of a possibly more sustainable shift in the manufacturer's product strategy?
According to South Korean media outlet The Elec, whose news tends to be reliable, Huawei has plans to only roll out 50 million smartphones for the entire year of 2021. That is far fewer than what the Chinese giant sold in the second quarter of 2020 (Q2 2020) alone (which amounts to 55.8 million units).
This also represents a 79% drop from the 240 million smartphones sold by Huawei in 2019 and a 73% drop from the 190 million units that analysts projected would be sold in this year alone.
Obviously, the intensifying US restrictions and the consequent endangerment of its semiconductor production are the main reasons for this reduced production rollout. Other sources such as the Chinese daily Digitimes reported that there is already a 30% drop in component orders for the Mate 40 range that is planned for this coming autumn.
However, this alleged drop in production is so significant that it cannot be a mere reaction to the US sanctions.
A disastrous scenario that needs to be put into perspective
In one of his reports, renowned analyst Ming-Ching Kuo explained at the end of August that Huawei could abandon the smartphone market in a worst-case scenario.
But this disastrous scenario can still be framed within a different perspective. In absolute terms, any manufacturer can go bankrupt in a worst-case scenario. This prediction doesn't mean much, and the analyst doesn't take that much of a risk when making such a vague prediction.
On the other hand, if the figure that 50 million smartphones will be produced in 2021 is confirmed, then it will be difficult not to see it as a real breakthrough, or at least a turning point, in Huawei's strategy when it comes to this particular product segment. This is all the more pronounced as the manufacturer will, by its own admission, run out of Kirin chips, whose production will completely cease by 15 September.
When the world's leading smartphone manufacturer decides to cut production by more than 70%, it can no longer be a simple preventive measure to anticipate the adverse consequences of the US sanctions. This could clearly reflect a willingness to shift its production efforts to other markets or segments, at least as a temporary measure.
Huawei is also expected to make several announcements regarding new products at its HDC developer conference starting this Wednesday, September 10th. If the manufacturer doesn't mention or announce the next generation Mate 40, we will have to ask ourselves certain pertaining questions.
This is especially so as Huawei has signed a big deal at IFA 2020. The Chinese giant reminded Europe of what it believes it has contributed to the economy in that region as well as the technology industry, renewing its commitment and determination to continue investing in the Old Continent.
During the HDC conference, it is highly likely that one will also learn more about HarmonyOS 2.0, or HongmengOS for those who are in Europe. Huawei's home mobile operating system is meant to complement its software alternative, beginning with HMS (Huawei Mobile Services) and the AppGallery.
At the same time, Huawei is putting the emphasis on its 5G strategy that is known as 1+8+N, which aims to harmonize its smartphone (1), connected objects (8), and connected home/health/AI (N) ecosystems. Imagining the application of this strategy without the central element, smartphones, seems more than unlikely.
Source: The Elec