Huawei Braces for 'Difficult' 2020 After Q4 Slowdown
Huawei's full-year revenues have fallen short of the company's forecast, a sign, perhaps, that the US campaign to throttle the Chinese firm is having an impact.
But the Chinese vendor still boasts sales that any other vendor in the communications networking and devices sector would love to report: Huawei says its 2019 revenues will top RMB850 billion (US$121.8 billion), an increase of about 18% year-on-year.
That is still a healthy increment over 2018, but compares with a 24% rise during the first three quarters and a 30% growth rate in the first two months of the year.
The cause of the slowdown appears to be the handset division, which in 2018 overtook the carrier equipment business to became Huawei's biggest unit.
But it is also the Huawei business group most vulnerable to US sanctions because it does not have software to replace Google Mobile Services (GMS), which includes apps such as Google search and maps.
Huawei had hoped to ship 300 million smartphones this year, compared to 206 million in 2018.
Despite beating targets during the first nine months of the year, smartphone sales slipped in the final quarter of 2019 after the release of the flagship Mate 30 Series without GMS.
The absence of Google software makes little difference to Chinese consumers, but it is critical for offshore markets: GMS appears to be beyond Huawei's reach for 2020 as well.
Despite that, the total of 240 million devices shipped is 17% higher than in 2018 and confirms Huawei as the world's number two handset supplier behind Samsung.
In his New Year address to staff, current rotating chairman Eric Xu said Huawei's mobile ecosystem, Huawei Mobile Services (HMS), would be "the foundation of our ability to sell smart devices in markets outside China."
The core of HMS is the Harmony OS, which was initially developed for low-bandwidth IoT applications and is still some way off prime-time as a smartphone system.
Xu did not elaborate on the sales numbers, or on projections for the coming 12 months, but warned that 2020 will be a "difficult" year.
"Survival will be our first priority," he said. "In 2020, we will continue to remain on the US Entity List. We won't grow as rapidly as we did in the first half of 2019, growth that continued throughout the year owing to sheer momentum in the market."
He acknowledged that the revenue and growth figures were "lower than our initial projections," but he said Huawei's business remained solid.
The numbers seem to corroborate claims by CEO Ren Zhengfei that the US supply ban has not affected the network equipment unit.
Despite US efforts to exclude it from 5G, Huawei is a leading vendor in the global 5G network market, with 65 contracts signed to date.
— Robert Clark, contributing editor, special to Light Reading