Huawei fears that its mobile business will experience an unprecedented decline in 2020, say industry insiders. Between the coronavirus pandemic and the permanent American sanctions, its supply chains have been terribly paralyzed for six months now. And the consequences of this mess are now starting to emerge.
Huawei’s recently reported projections illustrate the precariousness of its situation; The technology juggernaut would expect a 20% annual drop in smartphone sales, according to The Information.
Morale comes first
Only a small circle of company officials is currently aware of HQ’s realistic position on their unenviable situation. These employees have learned of the gloomy January forecast, the same source said. Huawei predicts that its annual handset sales will drop to 190 million units in 2020.
The figure falls far short of Huawei’s performance in 2019, which saw it show record growth across the board, even though its U.S. operations were halted on its knees. The device manufacturer sold 240 million Android smartphones over this period. This remarkable achievement represents a 15% improvement over one year, mainly due to domestic gains driven by a wave of consumer patriotism in China.
But challenging the Commerce Department is not a sustainable endeavor, especially when it is done in such a spectacular way. Huawei’s unofficial forecast for 2020 seems to confirm this, signaling that its days of explosive growth are now ending after nine whole years.
Do Huawei’s fears come true in 2020?
It really seems like Huawei just can’t take a break lately. The fact that its management is well aware of the grim reality it faces is therefore hardly surprising.
This has been the case since at least the fall, if not the month of August; that is to say the beginning of his last confrontation with the American government. Of course, Huawei has maintained its friendly public rhetoric in the face of crippling U.S. sanctions, but this public relations strategy is not new to the Chinese telecommunications giant.
Washington’s relentless attention has weighed heavily on the conglomerate for almost three decades now. And the few of its partners that the Trump administration has not touched – the COVID-19 crisis did. The latest fear of coronaviruses has closed many factories in the Far East, threatening Huawei’s ability to compensate for collapses abroad.
On the other side of the pond, Huawei’s CFO has been under house arrest in Canada since 2018 due to a request for extradition from the DOJ. His indictment includes corporate espionage, financial fraud, racketeering and several criminal conspiracies. The charges also extend to a number of Huawei subsidiaries, with the defense insisting that these are only geopolitically motivated attacks.