Two years ago, Huawei was on a fast run to become one of the largest smartphone manufacturers in the world. In fact, the company seriously threatened Samsung's dominance in this segment. However, in May 2019, the US government under the Trump administration decided to apply a ban on the company's activities. This led to serious consequences for Huawei, among them the inability to use US-related technologies and software.
The brand found workarounds to avoid losing its smartphones, but in September 2020, the company took one of the biggest hits when TSMC was forced to stop doing business with the Chinese firm. Without the supply of TSMC chips, the brand had to cut its Kirin chipset division. Proprietary chipsets have powered the company for the past few years, even with the ban. Without Kirin chips, the company found itself in an unpleasant situation.
One of its biggest cost-cutting measures was the sale of the Honor sub-brand to a Chinese company last November. This allows Honor to return to the market as a brand that does not have problems with the US ban. Huawei is now taking another step to reduce its costs. The company has reportedly asked the smartphone supply chain to cut orders by more than 60 percent.
The report comes from Nikkei Asia and claims that several suppliers have said that the brand is only targeting consumables orders for components for around 70 to 80 million smartphones in 2021. For a quick comparison, the Chinese behemoth sold 2020 million smartphones in 189. the supply target appears to mean a more than 60 percent reduction in the number of devices it can ship.
Huawei initially opposed the US ban by challenging the US government's decision. The Trump administration has accused the company of cyber espionage related to its ties to the Chinese government. The first critical blow to Huawei was the removal of Google-related applications and services from its phones. The brand can continue to use Android because of its openness. The brand then introduced Huawei Mobile Services and AppGallery to offer users a viable alternative to Google's mobile services. Huawei also introduced HarmonyOS, which would be a viable alternative to Android.
However, this strategy did not take off. Android remains the dominant smartphone OS worldwide thanks to its vast app ecosystem and developer network. Huawei used to have amazing specs, but now without its Kirin chipset division, it's becoming a regular smartphone brand. Their devices were less attractive to global customers due to the lack of Google apps, but the company still achieved good sales in certain markets in Europe.
However, this year everything will be more difficult. Huawei could slip further down the leaderboard of smartphone vendors. In recent months, we have watched other companies from China invest in global markets. Perhaps in an attempt to take stock that Huawei will undoubtedly lose. Even Honor has a better chance in global markets than its former mother brand.
Despite the change in the White House, it is unlikely that the US government will reverse its decision, which will allow the company to access American services. So 2021 will probably be the most difficult year for Huawei. Of course, we need to wait for an official statement from the company
