The first step towards saving the smartphone business for the Chinese company Huawei Technologies; which fell under US sanctions, was the separation of the Honor brand into an independent business. Now the Chinese giant is thinking about designing smartphones for third-party manufacturers who will sell them under their own brands.
The new plan of Huawei was shared by Bloomberg, citing its own sources. According to reports, Huawei Technologies wants to allow third-party companies to release models of smartphones developed by it under other brands; while retaining access to those components that the Chinese giant cannot purchase due to sanctions. Chinese companies PTAC and TD Tech are possible partners. The former already offers Nova-branded smartphones manufactured by Huawei on its website for corporate clients. In the future, the range of offers can expand at the expense of private brand models developed by the senior partner.
Reportedly, Huawei specialists have already begun to revise the design of key smartphone models in order to move away from using their own HiSilicon processors in the direction of replacing them with Qualcomm and MediaTek products. Together with the continued production of Huawei-branded smartphones, this will allow the company to sell more than 30 million smartphones by the end of next year. The restrictions imposed by the US sanctions have already led to the fact that Huawei’s revenue in the segment of consumer devices; which includes smartphones, has been falling for four quarters in a row. The leadership of the Chinese giant has repeatedly spoken out in favor of preserving this type of business even in the face of tough sanctions.
Huawei’s revenue in the third quarter decreased due to problems with the smartphone business
Huawei Technologies’ revenue fell 38% in the third quarter compared to the same period a year earlier. The reasons are clear: US sanctions have hampered production; and new areas of potential growth for the company are under development.
For the first three quarters, Huawei‘s revenue was 455.8 billion yuan ($ 71.32 billion); which is almost a third lower than in the same period last year. The overall profitability indicator reached 10.2%. According to Reuters, in the third quarter alone, the company’s revenue amounted to 135.4 billion yuan ($ 21.16 billion). According to the estimates of the company’s management, the financial indicators are in line with the forecasts.
The company was blacklisted by the United States in 2019 – it was denied access to critical American technologies. As a result, Huawei has virtually lost the ability to purchase components for equipment from third-party suppliers; as well as develop its own. The sanctions hit the company’s smartphone production hard. According to September estimates, the division’s revenues will decrease by $ 30-40 billion in the current year with its consumer business.