Huawei’s smartphone sales are down 40 percent, according to a new report out of Reuters. The company’s CEO, Ren Zhengfei, confirmed in the report that sales in the division have taken a major hit, and it’s all due to the tensions between Huawei and the United States.
According to Zhengfei, Huawei wasn’t expecting the US sanctions to take such a massive hit on the company as they did. Because of them, the company is predicting a $30 billion drop in revenue this year, with the Chinese OEM now predicting a $100 billion figure by the end of 2019. That falls dramatically below previous predictions which saw Huawei collecting $125-130 billion this year.
If you aren’t familiar with what’s going on, Huawei was recently added to the US Entity List which restricts third-party businesses from working with the listed companies. That meant Google had to revoke Huawei’s Android license, blocking the company from using such apps as the Play Store and Gmail. With a lack of Google services, it’s hard to sell an Android phone, and Huawei has definitely come to realize that.
Notably, the company hasn’t been totally blocked from using Google services. It has a temporary license agreement with Google so it can keep existing phones up and running with software upgrades. But any future phones the company intends to launch (including the Mate X) will have to wait until either Huawei fixes things between it and the US government or it starts shipping its own OS with a custom app store.
This hurts Huawei’s bottom line. If it can’t keep launching new phones with Google apps like it used to in China, there’s a good chance the OEM will soon slide down the top smartphone manufacturer list where it previously resided at number two. And if nothing gets resolved when it comes to the sanctions, the demise of the company could be inevitable.
Still, the company can recover from what’s going on. Zhengfei noted he expects Huawei to bounce back by 2021. But between now and then, anything could happen, so we’ll have to monitor things closely.