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Employees work on a mobile phone production line at Huawei's factory campus in Dongguan, Guangdong province, China, March 25, 2019. Photo: Reuters

Huawei reassesses goal to be world’s bestselling smartphone vendor after US blacklist

  • Huawei is now closely observing and evaluating the situation, Honor president Zhao Ming said at Shanghai event
  • ‘Too early to say whether we are able to achieve the goal’ of becoming No 1 by 2020, Zhao said

Huawei Technologies is reassessing its target to become the world’s top-selling smartphone vendor by 2020, after a US trade ban raised serious questions about its access to services that are crucial for international sales, according to a senior executive.

Huawei is now closely observing and evaluating the situation after the US government barred American companies from supplying the Shenzhen-based telecommunications equipment giant, according to Zhao Ming, president of Honor, one of Huawei’s smartphone brands, at a media briefing in Shanghai on Friday night.

“As the new situation has emerged, it is too early to say whether we are able to achieve the goal,” Zhao said, responding to questions about Huawei’s plan to overtake Samsung Electronics and become the world’s largest smartphone vendor before the end of 2020.

The US government in mid-May placed Huawei and its affiliates on a trade blacklist that restricted the company from buying services and parts from US companies without approval.

After the move, US corporations including chip makers Intel, Qualcomm, Xilinx and Broadcom have reportedly told their employees not to supply Huawei until further notice. Google also suspended Huawei’s access to future Android operating system updates, affecting its ability to offer popular Google apps on its phones in the future.

Foxconn, the Taiwanese electronics manufacturer that assembles handsets products for many phone brands including Apple and Xiaomi, has stopped several production lines for Huawei phones in recent days as the Shenzhen company reduced orders for new phones, according to people familiar with the matter, who asked not to be named as the information is private.

A robot passes an employee working on a mobile phone assembly line at a Huawei Technologies Co. production base in Dongguan, China, on Wednesday, March 6, 2019. Photo: Bloomberg

Smartphone manufacturers have flexibility built in their production schedules and can increase, or reduce, orders to meet changing conditions, and it is not clear whether the decreased production is temporary or part of a longer-term cut, the people said.

Foxconn had initiated a massive recruitment drive earlier this year due to Huawei’s surging sales, according to one person. Foxconn said it follows a strict company policy of not commenting on any matters related to current or potential customers, or any of their products. Huawei said that its "global production levels are normal, with no notable adjustments in either direction."

Huawei’s share of global smartphone shipments climbed to 15.7 per cent in the first quarter of 2019, up from 10.5 per cent in the same period last year, according to data from Gartner, an industry research firm. Samsung and Apple, currently the largest and the third largest vendor globally, saw their market share decline to 19.2 per cent and 11.9 per cent, respectively, in the first three months, the data showed.

Huawei, which calculates its global mobile shipments by combining both Huawei and Honor-branded phones, is aiming to win 50 per cent of the Chinese smartphone market by the end of this year and wrest the global sales crown from South Korea’s Samsung no later than 2020, Huawei’s mobile chief Richard Yu Chengdong said in March.

At Friday’s event in Shanghai, Honor president Zhao did not answer the question from reporters whether Honor’s business has encountered difficulties in overseas markets after the US ban. When asked about the cut in production, Zhao said he was not aware of the situation.

“All the difficulties make us stronger, no matter in mentality or in action,” Zhao said during the media briefing, held to unveil its flagship Honor 20 series for the China market following its global launch in London 10 days earlier.

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