Huawei's smartphone business on downward spiral after US blacklisting

Huawei is running out of chips to make smartphones with thanks to US sanctions. Photo / AP

Huawei's smartphone business is on a downward spiral as the Chinese company feels the chill from a US blacklisting that has strangled its supply chain.

The company's handset sales in the first quarter of 2021 were less than half of what they were a year ago at 18.6 million, according to data from research company Canalys.

This sent Huawei, once the world's biggest smartphone seller, into seventh place in sales rankings, well below Samsung and Apple and behind Chinese rivals Xiaomi, Oppo and Vivo.

Huawei is running out of chips to make devices with, thanks to sanctions blocking American suppliers from working with it. This dwindling supply and a forced sell-off of budget Honor brand has led to plunging sales. Huawei was the world's biggest smartphone seller as recently as the second quarter of last year.

The company sold Honor, its most popular smartphone line, to a state-led Chinese consortium in November last year amid growing pressure on sales.

The Trump administration has squeezed Huawei's smartphone business as part of a technology and national security battle against China that has also affected video app TikTok and messaging service WeChat.

In 2019, Washington blocked American companies from selling components and technology to companies including Huawei, a block that included software from Google's Android operating system. It ramped up its trade war offensive in May last year, barring international suppliers from using American technology to produce parts for the technology company.

In the days before Trump left office, Intel was warned in January this year that the Commerce Department would be revoking its license to sell to Huawei, and would be rejecting similar applications going forward.

Politicians had accused Huawei, founded by a former military engineer in 1987, of deliberately installing security holes that China's government could use for spying purposes in its technology with the White House claiming the company posed a national security threat. Huawei denies the allegations.

The UK and Australia last year removed Huawei, which helped build current 4G networks, from its upcoming 5G technology.

Huawei's founder Ren Zhengfei in February appealed to President Joe Biden for kinder treatment than that at the hands of Trump "in the interest of US companies".

Ren said: "I would welcome [a] phone call, and the message is around joint development and shared success. The US wants to have economic growth and China wants to have economic growth as well."

Huawei has launched a fresh legal challenge against US government restrictions, seeking to overturn the order.

Meanwhile Apple has revealed its fastest growth in almost a decade as the world's biggest company reported US$48 billion ($66.2b) in sales in the first three months of the year.

- Telegraph Media Group