A month after being placed on a trade blacklist by the Trump administration, Huawei is reportedly steadying itself for international shipments of its smartphones to decline by 40% to 60%. According to a report in Bloomberg, Huawei may end up pulling shipments of the Honor 20, its flagship phone for overseas markets, if sales are poor.
The U.S. Department of Commerce barred Huawei in May from purchasing parts from U.S. companies without prior approval from Washington, claiming that Huawei is a possible threat to national security. After the ban, Huawei founder and CEO Ren Zhengfei said the blacklist may slow the company’s growth, but “only slightly.”
But Bloomberg reports that the company is now steeling itself for international shipments to plummet, with Huawei sales and marketing manager internally forecasting a drop in shipment volumes between 40 million to 60 million smartphones. The Honor 20 will go on sale in parts of Europe, including France and the U.K., on June 21, but Huawei may stop shipments if it sells poorly.
In order to offset the anticipated decline in international shipments, Huawei wants to grab half of China’s smartphone market this year. According to Canalys, Huawei was the only company among China’s top five smartphone vendors to report growth as the rest of the market declined last year, achieving a 34% market share, but nonetheless it needs to ward off competition from Oppo and Vivo, which are both refreshing their product strategies in order to cover more consumer segments. Bloomberg reports that Huawei wants to increase shipments by spending more on marketing and expanding its distribution channels, but some executives have said its target is too high.
Meanwhile in the U.S., the trade blacklist is also impacting some of Huawei’s most important chip suppliers, including Qualcomm, Intel and Xilinx. Reuters reports that representatives from some companies have met with the Commerce Department to lift restrictions on parts for common devices that they say do not present security concerns, like smartphone chips.