Smelling blood, Huawei’s Chinese mobile rivals look to
capitalise on its U.S. woes
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[November 23, 2020] By
David Kirton
SHENZHEN, China (Reuters) - Chinese handset
rivals of Huawei Technologies including Xiaomi, Oppo and Vivo are making
aggressive moves to seize market share from their giant rival, after
stepped-up U.S. sanctions hobbled Huawei's supply chains, industry
insiders say.
Last week Huawei said it had sold its budget brand smartphone unit Honor
for an undisclosed sum in a bid to safeguard the latter's supply chain
from U.S. action, which has made it difficult to source essential
components.
All the same, Huawei's Chinese rivals smell blood in the mid- to
high-end phone market. In August a Huawei executive said the company
will not be able to produce its flagship processors that power its
high-end smartphones.
"What we can see now, whether from Xiaomi, Oppo or Vivo, is that they're
raising their forecasts for next year," said Derek Wang, an executive in
charge of production at handset maker Realme, which shares a supply
chain with Oppo.
"They believe the sanctions against Huawei will more or less hurt it in
the international market, and they may want to take a share of the
market from Huawei."
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Founded in 2018, Realme is on course to double its smartphone shipments
to 50 million this year, Wang said. It has built a base with low
price-offerings in Southeast Asia and India, and is looking to target
Europe and China next year with a push into the high-end market,
regardless of Huawei's situation, Wang said.
In August, the U.S. Commerce Department further choked Huawei's access
to U.S. technology essential to its handset business, on the grounds
that Huawei poses a security threat - a charge Huawei denies.[L4N2FK1NT]
Huawei briefly overtook Samsung as the world's biggest handset maker in
the first half of this year, before shipments fell 23% to 51.7 million
units in the third quarter, according to research firm Canalys.
Huawei still commanded 41.2% of the market in the third quarter,
followed by Vivo with 18.4%, Oppo with 16.8% and Xiaomi with 12.6%,
Canalys said. Apple has a lower share in China with 6.2%, but is
attracting strong demand for its 5G iPhone 12, Canalys said.
(Graphic: China Smartphone Shipments, Q3 2020 (Millions)
https://graphics.reuters.com/CHINA-MOBILE/HUAWE-COMPETITORS/
nmopadbnava/chart.png)
Industry watchers have confirmed a ramping up of orders from vendors.
Xiaomi has been most bullish, placing enough orders for up to 100
million phones between the fourth quarter of 2020 and first quarter of
2021, up 50% on projections before the August restrictions, consultancy
Isaiah Research says.
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A smartphone with the Huawei and 5G network logo is seen on a PC
motherboard in this illustration picture taken January 29, 2020.
REUTERS/Dado Ruvic/File Photo
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Oppo and Vivo's production forecasts had also risen by around 8% each since
August, with orders for up to 90 million and 70 million handsets respectively,
Isaiah Research's data showed.
Conversely, Huawei orders fell 55% to 42 million handsets in that time.
All four companies declined to comment on the numbers.
Xiaomi is also attempting to court Huawei's distributors in Southeast Asia and
Europe in the hopes of gaining exclusive deals, and is actively targeting
Huawei's high-end market share in China, said a source at Xiaomi familiar with
the matter.
Five industry sources on the supply chain side confirmed they had a surge in
orders from the three companies.
Some analysts believe the companies might be too optimistic about their targets,
but Realme's Wang said stockpiling of components have also been driven by
disruption to production caused by COVID-19 lockdowns earlier in the year and
because Huawei's move to boost its inventories impacted rivals' supply chains.
The rush to secure supplies has reverberated across the electronics chain, said
Paul Weedman, a supply chain project manager. "Prices have been rocketing
recently," he said, noting that it has become much harder to source LCD screens
even for tablets.
Analysts said Huawei's sale of Honor may partly fend off competitors' intrusion
into the budget-end of the market, provided that Honor is able to resume
sourcing U.S. technology.
"We still expect clear year-on-year growth from Huawei and Honor's smartphone
rivals in 2021, but likely at a lower ratio than their earliest expectation."
said Flora Tang, an analyst with research firm Counterpoint.
(Reporting by David Kirton; Editing by Shri Navaratnam and Emelia
Sithole-Matarise)
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