Huawei tallied strong sales in Q2 and became the smartphone leader in a market that's severely diminished as a result of the pandemic.
Huawei has taken the lead in global smartphone shipments for the first time, bucking a market downturn brought on by the coronavirus pandemic.
For the first time, the Chinese company that’s been blacklisted by the U.S. government led the industry with 55.8 million smartphones shipped in the second quarter of this year, according to a July 30 report from the International Data Corp. (IDC). Huawei’s 20% share of the market is a new peak for the company, driven by growth in China, IDC said.
The development comes even as the U.S. Department of Commerce earlier this year shut down the supply of chips to Huawei from Taiwan Semiconductor Manufacturing Co. (TSMC). A few weeks ago, TSMC said it will stop shipping chips to Huawei by September this year. Huawei has stockpiled enough chips and other components to continue making smartphones and 5G telecom equipment possibly through the rest of this year, according to analysts interviewed by EE Times.
“If you look at the 2019 report for Huawei that was filed a few months ago, they have $23.5 billion in inventories,” Arete Research analyst Brett Simpson said in a June interview. “They grew their inventory 75 percent last year. And they did the same in 2018 as well.”
While the purpose of the Department of Commerce restrictions was to blunt China’s lead in the 5G business, China appears poised to continue building its own 5G market, Simpson said.
Worldwide smartphone shipments decreased 16.0% year over year in the second quarter of 2020, IDC said.
“Smartphones shipments suffered a huge decline in the second quarter as they directly correlate to consumer spending, which had a massive reduction due to the global economic crisis and rising unemployment brought on by the widespread lockdowns,” said Nabila Popal, a research director with IDC. “This, combined with the closure of retail stores, especially in regions where online shopping is less common, compounded the negative effect on smartphone sales.”
By region, Asia/Pacific (excluding China and Japan), Western Europe, and the United States declined 31.9%, 14.8%, and 12.6% respectively. China fared slightly better with a decline of 10.3% and may show some early signs of market recovery, according to IDC.
“The smartphone supply chain ground to a halt when the pandemic hit. However, recovery, specifically in China, has been strong,” said IDC Vice President Ryan Reith. “The question now becomes what does demand look like with so much uncertainty around the world. We have already seen OEMs moving more aggressively with their 5G portfolios both in terms of production and price points. However, we still see consumer demand for 5G being low.”
Samsung shipped 54.2 million smartphones in the second quarter this year, finishing a close second to Huawei with a 19.5% share. However, the South Korean giant suffered a 28.9% year-on-year decline, the most significant among the five leading vendors. Samsung’s premium devices such the Galaxy S20 and the Galaxy Z Flip, unfortunately launched in the peak of the pandemic, are facing sales challenges despite price reductions, IDC said.
In third place, Apple shipped 37.6 million iPhones in the second quarter to take a 13.5% share of the market. iPhone shipments climbed 11.2% year over year thanks to the continued success of the iPhone 11 series and the timely launch of the new SE (2020), IDC said. The new SE found success as it effectively targeted the lower-priced segment, which bodes extremely well for Apple amid the pandemic, when consumers are shifting towards more budget-friendly devices, according to IDC. The expected launch of four new iPhone models will signal Apple’s entry to 5G and challenge Android 5G devices that have been out for more than a year, IDG said.
China’s Xiaomi hung on to the number four position with a 10.2% market share, according to IDC. Xiaomi’s business plunged in China and India due to lockdowns and anti-China sentiment in India, according to IDC. India and China have been involved in violent skirmishes on their mountainous border in the Himalayas this year.
Returning to fifth place, Oppo took an 8.6% market share despite a 18.8% year-on-year decline in shipments, the IDC report said. Roughly 60% of OPPO’s shipments were to its domestic market in China. in India, Oppo’s second largest market, the vendor faced challenges in both supply and demand with factory shutdowns and anti-China sentiment.