#Huawei somehow becomes the #1 phone manufacturer, thanks to the #Coronavirus

Huawei's logo seen at a technology conference.

Despite aggressive sanctions from the US government, Huawei has become the number 1 smartphone manufacturer in the world, according to Canalys. The company’s 55.8 million smartphone shipments in Q2 2020 put it at the top of Canalys’ charts for the quarter, marking the first time the company has passed Samsung for the top spot, writes Ron Amadeo.

Huawei’s top spot isn’t really due to it defeating US sanctions. Huawei’s sales are actually down slightly compared to last year, but in the age of the coronavirus, sales being down only “slightly” is a major win. Huawei sales are down 5 percent from Q2 last year, but Samsung sales have been tanking and are down 30 percent year over year. Samsung’s dramatic drop was enough to give Huawei the top spot at 55.8 million, compared to Samsung’s 53.7 million.

Canalys shows smartphone sales are down nearly across the board this year, with overall shipments falling 14 percent compared to Q2 2019. The one company with growth is Apple, in the #3 spot, which is up a whopping 25 percent. Canalys credits the new iPhone SE for a lot of that success, saying that “[i]ts new iPhone SE was critical in the quarter, accounting for around 28% of its global volume, while iPhone 11 remained a strong best-seller at nearly 40%.”

Seeing Huawei claim the top smartphone spot in the face of the US government’s export restrictions is a surprise, but the sanctions are having an effect. Huawei is dropping like a rock in the global market, with at least a 26-percent drop in international sales for the last three quarters. Huawei is somewhat offsetting that loss with a higher market share in China. In Q1 2019, Huawei’s shipments were split nearly evenly between China and the global market, at 51 and 49 percent, respectively. In Q2 2020, the company sold 72 percent of its phones in China, according to Canalys, with only 28 percent of sales hitting the global market.

Huawei might be surviving the COVID economy for now, but things are only going to get worse for the company in the future. Canalys warns that “[s]trength in China alone will not be enough to sustain Huawei at the top once the global economy starts to recover.” Thanks to the export ban, Huawei isn’t allowed to ship Google’s Android apps on new models, which is killing Huawei’s appeal outside of China (where the Google apps aren’t available anyway).

Huawei can’t use US chips or technology in its products, but it has been able to stay afloat inside China thanks to its in-house HiSilicon chip division. Soon, Huawei is going to face a chip problem, though: TSMC, the world’s leading silicon foundry, has said it will have to cut Huawei off from shipments after September 14. Huawei has apparently been planning for this and stocking up with huge orders, but that stock, like Huawei’s success last quarter, won’t be able to last forever.

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