Huawei is reportedly moving to make significant cost cuts, and after selling off its Honor sub-brand last year, the Chinese electronics company is now said to have asked its smartphone supply chain to reduce orders by more than 60 percent. A report on the matter on Nikkei Asia, multiple suppliers empaneled by the company have stated that the company only aims to order supplies for components of about 70 to 80 million smartphones in 2021. In comparison, Huawei reportedly shipped 189 million smartphones in 2020, and the reduced supply target appears to mark a decline of over 60 percent in the volume of devices that it may ship.
Huawei has been in a difficult spot ever since it was placed on the Entities List by the United States Department of Commerce. The latter essentially banned it from getting access to American technologies, the most critical of which was the Android operating system made by Google. Huawei initially held out against the ban, contesting the US government’s decision after the latter accused the company of cyber espionage activities linked to its ties with the Chinese government. In the following months, Huawei also introduced HarmonyOS, complete with its own Huawei Mobile Services and its own app store, as a viable alternative to Android.
However, the strategy has not taken off, as one may have expected. Android remains the dominant smartphone operating system across the world, particularly thanks to its massive, thriving app ecosystem and developer network. While Huawei launched devices with impressive hardware specifications, the crippling software setup on these devices hardly made them an appealing purchase, particularly outside its home market, China. 2021 now seems to be a year that would hit them even harder, and if the supply chain reports are to be believed, Huawei may slip down the smartphone vendor leadership boards even further.
Going forward, it also seems unlikely that the US government would turn back on its decision to keep the company banned from accessing American services. With the Chinese smartphone market also a largely saturated one, the near future in the smartphone business appears to be a tough one for Huawei. The company is yet to issue a statement on the reports, so more information should follow through in the coming days.
