US sanctions on Huawei are beginning to impact the Chinese firm’s business in key markets as handset sales in Europe tumbled 16% year on year in the second quarter, according to a report from market research firm Canalys released on Monday.
Why it matters: While sales at home surged on patriotic support for the Shenzhen-based firm, demand among European consumers waned after products were cut off from future updates for Google’s Android operating system amid US sanctions.
- Huawei’s domestic shipments soared 38% year on year in the second quarter, which analysts said stemmed from patriotic fervor among Chinese shoppers in response to US restrictions on the company.
- Google has cut Huawei’s access to future updates and services for the Android operating system after the US put Huawei on a trade blacklist in May.
- China blocks most Google services within the country, so Huawei uses a modified version of Android for the domestic market that lacks most popular Google apps such as YouTube and Gmail.
- “No consumers in Europe would want a phone without Google services,” Tiago Alves, vice president of Asia Pacific at Aptoide, a Portugal-based Android app store, told TechNode in an interview.
Details: Despite the drop, Huawei retained its position as the second-largest smartphone vendor in Europe with 8.5 million units shipped in the quarter, trailing South Korea’s Samsung with 18.3 million units.
- Xiaomi’s European shipments grew by nearly half in the period to hit 4.3 million.
“Samsung has been quick to capitalize on Huawei’s US Entity List problems, working behind the scenes to position itself as a stable alternative in conversations with important retailers and operators,”
— Ben Stanton, Canalys senior analyst
Context: Huawei unveiled an Android alternative called HarmonyOS last week, and claims that switching handsets to the new operating system would take only a few days if necessary.
- US sanctions on Huawei show no sign of easing up as the trade conflict with China continues.
- Huawei chairman Liang Hua said last month that the company faces major difficulties ahead and its consumer business will be most affected in the second half.