Huawei Stops Smartphone Production Lines

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A recent report published in the South China Morning Post claims that Foxconn which is the Taiwanese electronics manufacturer that assembles smartphones for many brands including Xiaomi and Apple has stopped the production of several lines of Huawei phones within the past few days.

 

Huawei Stops Smartphone Production Lines

 

Nevertheless, Huawei continues to maintain the number two position globally for smartphone sales in the first quarter of 2019.

 

However, it’s highly unlikely that Huawei will be able to maintain that position for the rest of the year. Apple will most likely surpass Huawei to claim the number two position later this year.

 

Last month, IDC reported that the only first quarter highlight from a vendor perspective was Huawei.

 

Huawei managed to move its way into the number two position and its the only smartphone manufacturer at the top of the market that had significant growth in the first quarter of 2019.

 

Huawei has had year-over-year growth of 50.3% in the first quarter of 2019 with volumes of 59.1 million units and 19.0% market share.

 

Huawei had the potential to overtake Samsung to become the number one smartphone manufacturer in the world.

 

The company had set the goal of surpassing Samsung by the end of 2020. Zhao Ming who is the president of one of Huawei’s brands recently told reporters as a result of the new situation it is unclear whether or not the company will be able to achieve that goal.

 

There has been quite a bit of speculation outside China about the impact on the new smartphone sales, prices and the trade-in values since the announcement of the U.S. blacklisting.

 

Quite a few reports have shown that sales are down and trade-in prices have been reduced which makes upgrading more difficult for existing users.

 

Smartphone sales in the U.K. have also been negatively affected because the 5G phones have been removed from the country’s first network launches.

 

Huawei has also been experiencing problems in Hong Kong where the local media claims that many Huawei users have claimed that their phones have been malfunctioning, unexpectedly turning off and becoming unusable.

 

According to a recent report, these problems occurred as a result of a recent operating system update.

 

The media reports stated that Huawei did not have a solution to this problem. To fix it, customers could reinstall the phones’ operating system.

 

However, that would delete all the data on the phones, most customers will not appreciate this.

 

Shortly thereafter, the U.S. sanctions against Huawei resulted in Google withdrawing Android support for future Huawei phones.

 

This is bad, however, it will not affect the existing phones. In a recent report on Asia Times, Francis Fong who is the honorary chairman of the Hong Kong Information Technology Federation stated that the situation was strange because it involved multiple smartphone models.

 

He suspected that the problem may have occurred as a result of a security issue in the updated file which was sent to the Android phone.

 

The reports made in the Hong Kong news may be a coincidence because it does not suggest that any existing Huawei smartphones should malfunction as a result of the U.S. sanctions.

 

Nevertheless, the stories about the prices and the sales, as well as the user experiences will continue until the situation has been fully resolved.

 

In such a fast-paced consumer market, this will be very difficult to manage.

 

Huawei is depending on China to find a solution before its market shares significantly deteriorates.

 

Last Friday, Beijing announced a non-reliable entity list as a direct response to the U.S. sanctions which targets U.S. firms that have withdrawn support for Huawei.

 

A Beijing spokesperson stated that foreign enterprises, individuals, or organizations that do not comply with the market rules, deviate from a contract’s spirit, stop supplies, or impose blockades to Chinese enterprises for non-commercial reasons and seriously damage the legitimate interests and rights of Chinese enterprises, will be included on a list of “unreliable entities”.

 

Huawei hopes that President Trump will come up with a trade talk concession where the Huawei situation will become the major negotiation point.