Huawei defies waves of accusations to 23% growth

It seems not even the White House can stop the progress of Huawei as the vendor records 23% H1 year-on-year growth despite being the focal point of the US/Chinese dispute.

It’s been banned in some market, ignored in others, entered onto the US trade Entity List, the subject of espionage accusations and faced continued scrutiny over the security credentials of its products, but somehow Huawei has managed to register another period of financial growth.

Just to put these results into perspective, Ericsson grew its revenues by 10% over the first six months of 2019, while Nokia’s sales increased by 4% year-on-year during its latest quarter. Huawei might be having a tough time of it, but it still managed to eclipse its rivals with 23% revenue growth over the first six months.

“This has been a unique period in Huawei’s history,” said Huawei Chairman, Liang Hua.

“Given the situation, you might think that things have been chaotic for us. But that’s far from the case. We have been working hard to ensure smooth operations, and our organization is as sound as ever. With effective management and an excellent performance across all financial indicators, our business has remained robust in the first half of 2019.”

With 50 commercial 5G contracts and 150,000 base stations shipped, there still appear to be interested customers despites the efforts of the US and its propaganda campaign to undermine the reputation of the network infrastructure market leader. This is a metric which Huawei has always been confident in publicly stating, though it is difficult to compare apples with apples as neither of its main rivals are prepared to declare the number of base stations shipped.

What will continue to surprise many around the world is the continued growth of the business despite the on-going storm of controversy which is swirling above. Some might also be gobsmacked about the inability of Ericsson and Nokia to capitalise of the situation. This is not the end of the 5G race for the network infrastructure vendors, but Huawei is still the clear leader.

What we don’t know is where these 150,000 5G base stations are being shipped. As more Western nations surge towards the 5G economy Nokia and Ericsson might be able to steal market share. For all we know, the 150,000 base stations are being shipped to Chinese telcos, with the other 40-odd contracts simply accounting for a few here and there.

Looking at the smartphone business, this is also remaining remarkably resilient despite the worries it will not be able to work with a number of key suppliers in the US. Google is the biggest concern as its Android operating system is unrivalled outside of the iPhone.

“In our consumer business, smartphone shipments (including Honor phones) reached 118 million units, up 24% YoY,” Liang said. “We have made great progress delivering services to our consumers across all scenarios, and have seen rapid growth in shipments of tablets, PCs, and wearables.”

Once again, the Huawei business has seemingly been able to defy trends in a way which has only associated with Apple. Smartphone shipments are declining all across the world, but in China this impact seems to be very notable. That said, no-one seems to have told Huawei.

According to Canalys, total smartphone shipments in China declined 6% year-on-year for the second quarter, though Huawei managed to increase its own sales by 31% in the market. This will explain growth in the consumer business, with Canalys suggesting 64% of its smartphone shipments in Q2 were in its domestic market.

“Huawei’s addition to the United States Entity List caused uncertainty overseas, but in China it has kept its foot on the accelerator,” said Canalys Analyst Mo Jia. “Its core strategy remains investing in aggressive offline expansion, and luring consumers from rival brands Oppo and Vivo, while unleashing a wave of marketing spend to support new channels and technologies.

“But the US-China trade war is also creating new opportunities. Huawei’s retail partners are rolling out advertisements to link Huawei with being the patriotic choice, to appeal to a growing demographic of Chinese consumers willing to take political factors into account when making a purchase decision.”

While growth is growth, if these estimates are accurate few Huawei executives will be thrilled by a dwindling influence on the global markets. Huawei might be able to be a very profitable business by focusing on its domestic market, but that is not the ambition of anyone involved; it has established a leadership position worldwide and it will not want to lose it.

For the moment, Huawei is in a healthy position. It is seemingly maintaining relationships with telcos around the world, but these are still early days. US aggression towards the vendor does not look like it will subside at any time in the near future, quite the opposite in fact. It remains a much more likely outcome this assault will intensify over the coming months, especially with President Donald Trump on the campaign trail, rousing supporters into a frenzied euphoric state of patriotism and xenophobia.