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Huawei’s Chinese rivals smell blood in the mid- and high-end mobile phone market. Companies like Xiaomi, Oppo and Vivo have increased their forecasts, even if Huawei is not standing by.
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Huawei Technologies’ Chinese rivals, including Xiaomi, Oppo, and Vivo, are making aggressive moves to gain market share after US sanctions hit Huawei’s supply chains, industry analysts say. .
Last week, Huawei said it sold its low-priced Honor brand for an undisclosed amount, in an effort to safeguard its supply chain from US initiatives, which have made it difficult for essential components to arrive.
Anyhow, Huawei’s Chinese rivals smell blood in the mid- and high-end mobile phone market. In August, a Huawei executive said the company will not be able to produce its flagship processors.
“What we can see now is this Xiaomi, Oppo or Vivo forecasts are increasing for next year, ”explains Derek Wang, executive of phone maker Realme, which shares a supply chain with Oppo.
“They believe the sanctions against Huawei will harm it in one way or another on the international market and may want to take away some of that market,” he adds.
Founded in 2018, Realme is on track to double its shipments this year smartphone to 50 million, says Wang.
The company has built a base with low-priced offerings in Southeast Asia and India and is targeting Europe and China starting next fiscal year, targeting the high-end market regardless of Huawei’s situation.
In August, the U.S. Department of Commerce further restricted Huawei’s access to U.S. technology essential to its mobile phone business. Washington claims that the Chinese company threatens the country’s security, an extreme that Huawei denies.
The tech giant briefly overtook Samsung, during the first half of 2020, as the largest cell phone maker in the world, before shipments dropped 23% to 51.7 million units in the third quarter, according to the report. Canalys research company.
Huawei still controlled 41.2% of the market in the third quarter, followed by Vivo (18.4%), Oppo (16.8%) and Xiaomi (12.6%), Canalys said. Apple has a smaller share in China, at 6.2%, but is attracting strong demand for its iPhone 12 5G, according to Canalys.
Industry analysts confirmed an increase in orders from suppliers. Xiaomi was the most optimistic, ordering up to 100 million phones between Q4 2020 and Q1 2021, 50 percent more than projections before the August restrictions, according to consulting firm Isaiah Research.
The Oppo and Vivo’s production forecasts are also increasing about 8% each since August, with orders of up to 90 million and 70 million phones respectively, according to data from Isaiah Research.
However, over the same period, Huawei’s orders dropped by 55%, reaching 42 million mobile phones.
All four companies declined to comment on their results.
Five sources from the supply chain industry confirmed they saw an increase in orders from the three companies.
Some analysts believe that companies are overly optimistic about their goals. In this sense, Wang explains that the storage of components has grown for two reasons: the interruption of production derived from the borders last spring and the impact on rival supply chains that the increase in Huawei’s inventories had.
The rush to supply security has impacted the entire electronics chain, says Paul Weedman, supply chain project manager. “Prices have skyrocketed lately,” he explains.
Analysts believe that the sale of Huawei’s Honor may partly prevent competitors from entering the low-cost mobile phone market, provided Honor can resume buying US technology.
“We expect clear year-over-year growth from rivals Huawei and Honor in 2021, but likely at a lower than expected rate,” sums up Flora Tang, analyst at research firm Counterpoint.
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