Huawei's current chairman sees lower growth for the company next year

Huawei's current chairman sees lower growth for the company next year
According to Bloomberg, a memo written to Huawei's 190,000 employees by the company's rotating chairman Eric Xu said that Huawei's growth slowed in the second half of this year. For 2019, the company grossed $120 billion, an 18% gain from 2018's top-line number. But revenue growth in the first half of this year was 23% indicating that the U.S. supply chain ban that was instituted in May is having a negative effect.

Because of the ban, Huawei cannot license the Google Play services version of Android which means that recent models like the Mate 30 series and the foldable Mate X cannot use Google apps like Gmail, Search, the Play Store, Maps, Messages and more. That doesn't matter in China where many Google apps are banned anyway. But it does matter outside of China where phone buyers want to be able to use Google's apps and the licensed version of Android.

Huawei's current chairman sees lower growth next year


Thanks to a wave of patriotism exhibited by consumers in China, Huawei was able to ship 240 million handsets globally in 2019 for a 16.5% year-over-year gain. That figure was good enough for Huawei to take second place behind Samsung and ahead of Apple. Chinese consumers supported the company which they see as a victim of U.S. bullying tactics. Huawei certainly made the best out of what could have been a terrible situation. Still, Xu's memo pointed out that 10% of the company's worse performing managers will be on the block in 2020. Business units could end up combined with other segments while others might end up reduced in size. Some employees might end up moving from one business unit to another. As the executive points out, "Survival will be our first priority. 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."


As the year started, Huawei estimated that it would ship 300 million handsets in 2019 and hoped to surpass Samsung to become the largest smartphone manufacturer in the world. If Huawei did deliver 240 million phones this year as Xu wrote in his memo, it would mean that the company fell 20% short of its goal.

Huawei has a game plan for next year that includes pushing its own app ecosystem called Huawei Mobile Services as a way to replace Google's ecosystem. This could allow the company to drive sales outside of China. Xu's memo also discusses expanding the use of chips designed by the company's HiSilicon unit for the enterprise and in the cloud.

For Huawei to be allowed to access its U.S. supply chain again, it will have to be taken off the Commerce Department's entity list. Earlier this year there was talk that Huawei could be used as a bargaining chip by the U.S. in order to get better terms for a new trade agreement with China. But so far, any negotiations between the two countries have not included Huawei based on wire service reports.

The Trump administration considers Huawei to be a national security threat because, under the laws of China, the government can demand that the company spy on consumers and corporations and send that information to Beijing. U.S. lawmakers fear that Huawei's phones, tablets, and networking gear contain back doors that will transmit illegally acquired information to the Chinese government. As a result, the U.S. has warned allies not to use Huawei's equipment to help build out their 5G networks. The company happens to be the largest manufacturer of networking equipment in the world. We should point out that Huawei denies all of these allegations.

Xu does not sound optimistic about 2020 with his talk of closing or shrinking divisions and laying off employees. And who knows how long Huawei will remain a darling of Chinese consumers. If Huawei still hopes to become the most popular smartphone manufacturer in the world, it will have to get off the entity list somehow.

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35 Comments

1. meanestgenius

Posts: 22752; Member since: May 28, 2014

It’s extremely unfortunate, but a business, any business, is going to do what it has to in order to survive and remain profitable. Huawei is going to hit some hard times in the near term, but I do see them remaining strong and not crumbling in the face of this ban like ZTE did. Sales will of course slow down in countries that favor GMS on their Android smartphones, but I don’t believe there will be any “doom and gloom” for Huawei. They will adapt. The fact that Huawei has been able to grow sales YoY is to be commended. On the networking equipment side, things don’t look as bad, as India is going ahead and allowing Huawei to participate in 5G trials, and the U.K. may lean the same way with Huawei. Respective links provided below: https://www.huaweicentral.com/india-allows-huawei-to-take-part-in-5g-trials/ https://www.huaweicentral.com/pm-boris-johnson-can-allow-huawei-for-5g-network-development-uk-security-chiefs/ It’s going to be a rough 2020 for Huawei, but I don’t see them losing their #2 spot in the smartphone space and I definitely don’t see anyone replacing them as the #1 provider of networking equipment worldwide.

2. midan

Posts: 3212; Member since: Oct 09, 2017

"It’s going to be a rough 2020 for Huawei, but I don’t see them losing their #2 spot in the smartphone space " Based on current trend, without Google they propably won't keep the #2 spot. If they can get google back then they can. If they already lost 60 million sales to what they expected for this year. Next year will show the real impact from lack of google, not this year. I'm also noticing Xiaomi getting lot more ground in EU currently, very likely thanks to Huawei situation and Samsung is also back and Apple also having very good momentum.

3. meanestgenius

Posts: 22752; Member since: May 28, 2014

The “current trend” has them increasing sales in the largest smartphone market in the world. I don’t see them losing enough ground to lose the #2 spot globally in the smartphone market. There is no smartphone OEM growing sales at a large enough and fast enough rate to displace Huawei at this time. They lost 60 million in sales with limited releases of their latest smartphones. In 2020 we will not only see their current smartphones released in more markets, but they are predicted to sell 100 million 5G smartphones in China alone: https://www.huaweicentral.com/huawei-to-sell-100-million-5g-smartphones-in-china-alone-says-analyst/ The EU is not going to be the determining factor that makes or breaks Huawei in terms of regions. China and India are, and Huawei has only been growing in China while practically everyone else has been losing sales there. Huawei is eating into their sales in China.

4. midan

Posts: 3212; Member since: Oct 09, 2017

Next year they will have limited releases too, just saying and most people outside China wants google services. Why would people buy crippled devices from Huawei if they can get more buying for example Samsung. The phone market is so competitive, you really can't afford situations like what Huawei is having. "but they are predicted to sell 100 million 5G smartphones in China alone: " But they predicted 300 million sales for this year, just saying :)

5. meanestgenius

Posts: 22752; Member since: May 28, 2014

Next year they have already said that their current smartphone releases without GMS will me released in more regions next year. There are places (UAE, for example) and elsewhere that phones without GMS will sell. And you can almost certainly expect them to maintain high sales in the largest smartphone market in the world, China. “But they predicted 300 million sales for this year, just saying :)“ But you are clearly glossing over the fact that I said “in China”, where GMS are already banned, so this prediction can absolutely become a reality. Just sayin’. :)

6. midan

Posts: 3212; Member since: Oct 09, 2017

"But you are clearly glossing over the fact that I said “in China”, where GMS are already banned, so this prediction can absolutely become a reality. Just sayin’. :)" The point wasn't the country, point was that you can't really know what's going to happen in the mobile market and can't predict what happens in one year. "And you can almost certainly expect them to maintain high sales in the largest smartphone market in the world, China. " How? again year is a very long time in mobile world and those other companies want to get Huawei sales by making better and better phones.

7. meanestgenius

Posts: 22752; Member since: May 28, 2014

“The point wasn't the country, point was that you can't really know what's going to happen in the mobile market and can't predict what happens in one year.” Except the point is the country as far as Huawei is concerned. That’s been proven already by the fantastic growth it has experienced in China already. “How? again year is a very long time in mobile world and those other companies want to get Huawei sales by making better and better phones.” By doing what they’ve been doing, which is putting out a more compelling product than the rest in China.

9. midan

Posts: 3212; Member since: Oct 09, 2017

"Except the point is the country as far as Huawei is concerned. That’s been proven already by the fantastic growth it has experienced in China already. " Company can't grow endlessly in one country, that's why we see xiaomi etc. coming to EU and other countries because you need many countries to grow, just like Huawei been doing, but now that situation got a lot worse. It's interesting to see can their China sales compensate drop in other markets next year.

10. midan

Posts: 3212; Member since: Oct 09, 2017

i'm answering to myself. End of last year Huawei sold 60 million phones, now this end of the year they only sold around 55 million (Q3 67 million), which is worst for them in whole year, and holiday time should be very good for phone companies. And they still couldn't beat their last year ending, which is showing that strong sales in China aren't enough to beat other markets where the sales are down. Just like i expected.

13. meanestgenius

Posts: 22752; Member since: May 28, 2014

“Company can't grow endlessly in one country, that's why we see xiaomi etc. coming to EU and other countries because you need many countries to grow, just like Huawei been doing, but now that situation got a lot worse. It's interesting to see can their China sales compensate drop in other markets next year.” No one said that they could, but we have just seen phenomenal growth in China by Huawei never seen before by an OEM there. They can surely continue to eat away at everyone else’s market share, as is the case of what has been happening. And let’s not act like they still aren’t moving units in other countries/regions, because they are. You keep mentioning the EU, but they will experience more growth in the UAE than the EU. Their China sales won’t compensate for every loss, but it will surely lessen the blow.

14. meanestgenius

Posts: 22752; Member since: May 28, 2014

i'm answering to myself. End of last year Huawei sold 60 million phones, now this end of the year they only sold around 55 million (Q3 67 million), which is worst for them in whole year, and holiday time should be very good for phone companies. And they still couldn't beat their last year ending, which is showing that strong sales in China aren't enough to beat other markets where the sales are down. Just like i expected. But Huawei did beat last years sales. They had +20% YoY growth: “Eric Xu, the rotating chairman of Huawei comes up with a new graph about consumer business and said that Huawei shipped 240 million smartphones this year with a 20% increase from 2018.” https://www.huaweicentral.com/huawei-smartphone-shipment-to-exceeds-240-million-units-in-2019/

18. midan

Posts: 3212; Member since: Oct 09, 2017

"But Huawei did beat last years sales. They had +20% YoY growth:" No-one have said anything else? Fact is that end of the year was down around 5 million units to 55m and last q they sold Whopping 67m. Which shows how big negative impact this had for huawei for end of the year even with strong China sales. Or maybe the strong China sales happened q3 and already lowering? With their earlier sales they should have sold 70m based on last year numbers. If this is the upcoming trend, start of next year going to be even worse.

20. meanestgenius

Posts: 22752; Member since: May 28, 2014

“No-one have said anything else?” You implied it when you said this year was worst for them, and the data shows that it in fact was not. No one said that Huawei wouldn’t lose sales in areas where smartphones with GMS are most prevalent, but there are areas, especially China, where GMS on a smartphone aren’t as important as many make them out to be. Whether YOU feel they should have sold x-amount of smartphones during a certain time period isn’t important. The bottom line is that they beat last years sales, which is what’s most important. We will see just how bad it gets for Huawei, but I still feel that even with it getting rough for them, they are not going to lose the #2 smartphone slot globally. As I sad, no OEM is growing as much or fast enough to knock them out of that spot, not even Apple.

24. midan

Posts: 3212; Member since: Oct 09, 2017

"You implied it when you said this year was worst for them, and the data shows that it in fact was not. " I never said that, i was only talking about their Q4 which is very bad and alarming. Over ten million drop to q3 numbers for holiday q is not good at all.

25. meanestgenius

Posts: 22752; Member since: May 28, 2014

“I never said that.” I never said that you “said” it, I said you implied it. But the fact is, they still beat last years numbers. And while it remains to be seen how they fair in the coming year, I doubt that they get removed from the #2 spot or the #1 spot globally in smartphones and networking equipment, respectively.

22. ScottsoNJ56

Posts: 155; Member since: Oct 01, 2017

ZTE didn't crumble and they didn't have the Chinese government backing them up like Huawei. ZTE admitted they made a mistake and paid a fine. Did they have to do that? No but unlike Huawei they don't have the the Chinese government backing them. So I guess they decided to pay the fine and hope they can recover. But I also think Huawei is so much bigger than them which means ZTE didn't have that many options.

23. meanestgenius

Posts: 22752; Member since: May 28, 2014

What world do you live in? ZTE ceased all major operations after they were sanctioned: https://www.cnet.com/news/despite-paralyzing-us-commerce-department-ban-zte-is-still-fighting-for-its-life/ Post proof that the Chinese government is backing Huawei, or you're blowing smoke as usual. I know you hate Huawei, but let's not post speculation and innuendo, especially since Huawei has repeatedly denied being in bed with the Chinese government. You are right about one thing though, for once. Huawei is much larger than ZTE, and can not only weather this storm, but they will also eventually prove, like they have been doing, that they don't necessarily need the U.S.

26. ScottsoNJ56

Posts: 155; Member since: Oct 01, 2017

Why do you constantly want to fight? I don't "hate" Huawei. I don't hate anything or anybody. From all the articles out there it would look to me that the government is backing them. If you don't believe that that's fine. That is what my opinion is. I can't prove that they are and you can't prove that they aren't. Just because they say they are not doesn't make it true.

27. meanestgenius

Posts: 22752; Member since: May 28, 2014

Lmao says I want to constantly fight, but you responded to me first, not the other way around. Maybe you should be asking yourself that question. Better yet, maybe you should have thought about that before you started with the name calling on the other article. Your opinion is your opinion, but I deal in facts. If you make a claim, back it up with proof. It’s that simple. There is no article out there that ISN’T written from the point of view of someone that doesn’t have an ulterior motive that claims Huawei is backed by China. The burden of proof is not on me, as I’m not the one that levied any accusations. I go by all of the evidence available to me, and that evidence says that there isn’t any solid proof that Huawei is backed by the Chinese government. Just because you say they are doesn’t mean it’s true.

30. ScottsoNJ56

Posts: 155; Member since: Oct 01, 2017

Huawei's deep ties with the Chinese government go all the way back to the company's founding in 1987. Ren Zhengfei, Huawei's founder, has long been deeply connected with the Chinese government, working as an engineer for the People's Liberation Army before moving into commercial electronics in 1983. Through the 1990s Huawei demonstrated strong ties with the Chinese government, and by 1996 it was labeled a "national champion" following major contracts to construct the country's national telecommunications network. Alongside this, experts have claimed the growth of the company has been financially supported by Chinese state agencies – an allegation the company has consistently denied. For years Huawei has been beset by international legal issues. From accusations of intellectual property theft, to major international sanction violations, the company inarguably has a messy record of operating on the fringes of global law. Perhaps the most dramatic development was the arrest of Huawei's Chief Financial Officer in late 2018. Meng Wanzhou, daughter of Huawei founder Ren Zhengfei, was arrested in Canada on charges of bank fraud at the request of the US. Wanzhou is currently entrenched in a Canadian court battle as the United States attempts to extradite her, while her lawyers, and the Chinese government, claim the entire exercise is simply an attempt by Western governments to stifle the success of Huawei's international business dealings.

32. meanestgenius

Posts: 22752; Member since: May 28, 2014

In response to your first two paragraphs, these excerpts are from the first link posted: “Huawei has called WSJ a “disingenuous and irresponsible” over its claim that the Chinese government has held $75 billion in support for Huawei to become the number one player in the telecom world. Huawei through a statement said the article published by WSJ is based on false information, poor reasoning and speculated wildly about the company’s growth. In response to WSJ’s report, the Chinese tech giant presented the fact that it is in the industry for the past 30 years, supported by 190,000+ employees. Coming to its finances, Huawei says it has invested a total of more than 73 billion USD over the past decade in research and development. Alone in 2018, R&D spending reached USD 15 billion, making it the 5th largest R&D spender in the world including 4 billion USD on 5G, which is more than the combined total of all major US and EU vendors. To clear its stand on relations with the Chinese government, Huawei said that it’s no different than any other private company that operates in China and it has never received special treatment. Over the past 10 years, 90% of the company’s capital comes from business operations.“ So the WSJ clearly didn’t take into account the amount of time and money Huawei has invested in R&D, instead choosing to assume that Huawei became the tech giant that they are from excessive help from the Chinese government. Huawei clearly debunks that, and even notes that they don’t get treated any differently than any other tech company that operates in China. By the way, Nokia was once lauded as a “hero” company in Finland. Does that mean they are nefarious and are totally propped up by the Finnish government? Absolutely not.

33. meanestgenius

Posts: 22752; Member since: May 28, 2014

In response to the end of your second paragraph and last paragraph, I’m posting from the second link I provided. It’s clear that her arrest is political motivated, and her rights were violated: “The legal team of Huawei Chief Financial officer, Meng Wanzhou has been granted permission by Canada’s attorney general to hand over evidence and documents of her arrest. Meng’s lawyers say Meng was denied her constitutional rights when she was detained, interrogated and searched for three hours at Vancouver’s international airport in December by the US Federal Bureau of Investigation (FBI) before being formally arrested. According to Reuters, Associate Chief Justice Heather Holmes in the Supreme Court of British Columbia agreed with Huawei’s appeal for Canada’s attorney general release more documents relating to the run-up to and events of the arrest. Meng’s team says that the evidence could support its claim of an abuse of process. In her ruling, Holmes wrote that she found the evidence tendered by the attorney general to have “notable gaps,” citing the example of why the Canadian Border Services Agency (CBSA) “made what is described as the simple error of turning over to the RCMP (Royal Canadian Mounted Police), contrary to law, the passcodes CBSA officers had required Ms. Meng to produce.” Holmes also said the attorney general did not provide adequate evidence to “rebut inferences from other evidence that the RCMP improperly sent serial numbers and other identifiers of Ms. Meng’s devices to the FBI.” Holmes said the gaps in evidence raised questions “beyond the frivolous or speculative about the chain of events,” and led her to conclude that Meng’s application “crosses the air of reality threshold.”

34. meanestgenius

Posts: 22752; Member since: May 28, 2014

Everything that you claim to be true is speculation and accusations without proof, at best. Something that I’ve constantly said. Huawei has constantly and consistently denied and debunked any ties to the Chinese government that would say that they are spying on their behalf. The WSJ article is clearly spun to favor the U.S. governments narrative about Huawei. Apple, Samsung, Google, Facebook (and its “subsidiaries” like Instagram), Snapchat, BLU, and a plethora of other companies have all been accused of IP theft, with many U.S. companies like Apple being proven guilty of it at one time or another in a court of law. I bring that up to point out your rampant hypocrisy. To you, Huawei accused equals “Huawei did it, Huawei bad”. Other companies get proven to have stolen IP and proven to have backdoors on behalf of the U.S. government, and you are quieter than a church mouse. You are no doubt going to complain about me bringing up this hypocrisy, but you can’t deny it, either. You once said Huawei should be banned forever (but you don’t hate them....riiiiiight), but you’ve never said that from what I’ve seen about any other tech company that has been PROVEN of their wrongdoings like IP theft and backdoors for the U.S. government. Hypocrisy.

35. ScottsoNJ56

Posts: 155; Member since: Oct 01, 2017

I don't see any proof of Google having backdoors. Oh that's right. Everything you post is proof and everything I post is hearsay. Get F--- outta here. You don't like this country than get the F--- out. China and Huawei are nothing but communist liars and thieves.

36. meanestgenius

Posts: 22752; Member since: May 28, 2014

Snowden released proof of many tech companies, Google included, having backdoors. Oh, that’s right, everything you post is “proof” while you live in complete denial of the facts and to you, everything I post ie hearsay. Fck outta here with that BS. You want to be blinded by everything that’s draped in the American flag, you can go right ahead and do that ridiculousness. The U.S. government is no better than any other country committing wrongdoings, and are often times worse, committing atrocity after atrocity against their own citizens of a darker hue, continuously practicing institutionalized racism, bombing their own citizens, instituting concentration camps, bombing children abroad, and much worse. By the way, thanks for revealing your true nature, and considering that your ancestors stole this country from the indigenous people of this land, YOU get the fck out.

37. ScottsoNJ56

Posts: 155; Member since: Oct 01, 2017

And your ancestors ran the concentration camps and volunteered for lobotomys like your sorry ass. What did Snowden release? His own agenda like Huawei does. China commits atrocity after atrocity against their own citizens, they kill them sensor them and make them all servants. You want to be blinded by all the anti American claims from all the jealous people that can't stand ANYTHING American. Fck outta here with your BS. You are another one of the American hating people that don't have a clue. You stick up for all the other countries because you don't have balls enough to stand up so you jump on the anti American bandwagon. So go join and live in 1 of those countries you stupid dumbass !!!!

38. meanestgenius

Posts: 22752; Member since: May 28, 2014

Bwahahahahahahahahaha!!!! Do you even know what nationality I am? Obviously not. It’s clear it was your ancestors running concentration camps and you are a clear candidate of a lobotomy. But do keep on revealing your true bigoted nature. It’s refreshingly easy to out you on these sites, as you all always get so easily triggered and do most of the work of outing yourselves with your “seething with anger” tirades. Snowden released the facts. You choosing to remain in denial about it is your problem. I never once have claimed China hasn’t committed atrocities, nor have I ever defended China, and I never will. The Chinese government is almost as vile as the U.S. government that your white privilege has you defending and being so blinded by. I’m not “blinded” by anti-American claims. I LIVE in America, and have seen and experienced first hand the some of the atrocities committed by this country, especially against people of a darker hue and nationality like me. No one is “jealous” of America. Stop that nonsense and fck outta here with your ridiculous BS. YOU are either in denial about the facts of this country, or you’re a part of the problem and willfully support it. I will NEVER support any country that commits atrocities like America or China has. It’s your own IGNORANCE that equates me defending Huawei, a tech company that happens to be Chinese in origin, with defending the Chinese government. But with you, stupid is clearly as stupid does.

39. ScottsoNJ56

Posts: 155; Member since: Oct 01, 2017

Well as usual you live in a fantasy world. YOU brought up ancestors not me so if anyone is a bigot and prejudice it is you. And I too have seen and experienced prejudice and hate against myself. I am half Japanese so I’ve dealt with prejudice all my life. But where you are wrong is America is not prejudice against African Americans ,Asian, Spanish etc. Its certain people not EVERYONE and certainly not a whole country. Chinese hate Japanese and vice versa, Cubans hate Mexicans and vice versa. But not all of the previous nationalities hate but a great majority do. Does that make all those people and countries prejudice? No. That’s just life. Not everyone is prejudice. It is taught. So since this has turned so ugly I will apologize for everything I have said and if I have offended you I am sorry. I will speak for myself. Sometimes to prove I am right I carry things too far and make things personal which I have done here. So we can agree to disagree and I will now stop with my personal attacks because I’ve lost track of things trying to be right. So please accept my since apologies and I will step away from these discussions. Scott

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