Huawei phone

This is how apparently bad the situation with Huawei’s phone is now

Huawei has reportedly reduced its smartphone production targets for 2021, stung by US sanctions which show no sign of abating even with the change of US president. The Chinese giant was on an upward trajectory, with both flagship Mate and Pro series handsets and far more affordable pricing for the budget market, but the list of U.S. entities put an end to that.

Initiated by the Trump administration, Huawei’s listing in the trading block register prevents it from doing business with American companies. This prevented the company’s smartphones from including Google apps and services like Gmail, YouTube, and access to the Google Play store, as well as cutting Huawei’s access to chips, modems, memory, and more.

Expectations from some quarters had indicated that the rules could ease somewhat with the change in the White House. However, President Biden’s administration has shown no sign of withdrawing from the trade embargo. This forced Huawei to take strong action, including turning Honor into a standalone company so that it could make its own independent deals.

Despite this, according to the Nikkei, expectations for the production of Huawei phones in 2021 have dropped significantly. The company has reportedly informed its suppliers that orders for smartphone components will fall by more than 60% this year, insiders have leaked. Compared to the 189 million smartphones shipped in 2020, it now plans to produce 70 to 80 million handsets this year.

It’s not just the magnitude of orders that has been impacted, but the types of phones they are intended for. The demand for components is limited to those required for 4G phones, as 5G modems still cannot be imported. Huawei was cleared in November last year to import 4G modems from Qualcomm, but not the 5G versions from the US chipmaker.

Huawei declined to comment on the leaks, which also suggests orders could end up falling to around 50 million units. However, this isn’t the first time we’ve heard of worrying forecasts for the company’s phone business. In early January 2021, for example, independent research predicted that the Chinese company might only be able to build around 45 million devices.

While protesting the sanctions and his innocence amid accusations of close involvement with Chinese government security services, Huawei has also tried to find workarounds. Rumors have suggested that it is considering selling its flagship brands of phones – something Huawei has strongly denied – assuming the combination of the blacklist and wider global shortages of electronic components would weigh even more on its handset business.

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