Kuo thinks Huawei will exit the smartphone market if the worst comes to the worst

Kuo thinks Huawei will exit the smartphone market if the worst comes to the worst
Huawei could crumble under pressure and bow out of the smartphone market, according to TF International Securities analyst Ming-Chi Kuo (via MyFixGuide).

The US has been after Huawei since last year. It started with the company's placement on the entity list, which led to Google cutting off ties with it. As a result, new Huawei and Honor phones no longer come with Google apps and services. 

More recent restrictions mean the company could neither solicit help from manufacturers to build in-house Kirin chips nor get SoCs from chip makers like Qualcomm or MediaTek.

The reason behind that is that most of the industry, including contract manufacturers and camera lens suppliers, use American-origin technology and they would have to apply for a special license if they wish to continue business with Huawei after 15 September.

MediaTek is one company that has already applied to the US government for permission to continue shipments after the mid-September deadline.

Kuo thinks that even if Huawei is somehow able to get smartphone parts after the deadline expires, its competitiveness and market share will still suffer. 

From thriving to barely surviving 

In Q2, Huawei surpassed Samsung to become the number one smartphone seller in the world. In 2021, its global sales are expected to fall by as much as 75 percent. This means it would need fewer components such as cameras and 5G chips, and this could affect the whole industry. 

Huawei has apparently set high standards for components that go inside of its flagship smartphones and if it scales down production, the entire supply chain could suffer. This would force suppliers to reduce the price of their parts next year and may also lead to a technological slowdown.

Kuo says that the best-case scenario is that the company's market share declines, and the worst-case scenario is that it exits the smartphone market. Per an earlier report, Huawei will lose 30 percent of its domestic market share to local rivals if the restrictions are not eased. Kuo's predictions are in line with that and he believes Apple, Oppo, Vivo, and Xiaomi will greatly benefit from Huawei's misfortunes.

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