Huawei Retakes Top China Smartphone Sales Spot

Huawei returned to the top smartphone sales spot in China in the first two weeks of this year, the first time it has led sales in the country since the end of 2020, according to a report by research firm Counterpoint.

The company was added to the US Entity List trade blacklist in 2019, preventing it from accessing US technology and services from firms including Android developer Google.

The sales surge, which follows Huawei’s introduction of an advanced 5G handset last year, underscores the failure of increasingly strict US export controls to prevent China from developing and manufacturing advanced technologies such as high-end semiconductors.

Huawei’s Mate 60 Pro 5G handset, announced last August, uses a Kirin 9000S processor locally developed by China’s Semiconductor Manufacturing International Corp (SMIC) and the Android replacement platform HarmonyOS.

Tech development

In the Sunday report analysts Ivan Lam and Zhang Mengmeng said brand loyalty among Chinese consumers played a strong role in the popularity of the Mate 60 Pro.

They pointed out, however, that Huawei continues to face stiff competition from Apple and high-end models from domestic competitors such as Xiaomi, Oppo and Vivo.

Huawei last released a 5G handset in October 2020, the Mate 40 series, after which it phased out the feature due to an inability to acquire the necessary 5G chips.

“[Huawei’s] success holds profound significance beyond Huawei, as it suggests that Chinese companies are finding ways to start competitively producing advanced semiconductors at scale despite US attempts to restrict the industry’s development,” wrote Nina Xiang, managing director at TH Capital, in a Nikkei opinion piece on Friday.

“The US must reconsider its approach to technology sanctions, recognizing the limitations of such policies and their detrimental impact,” she wrote.

Premium growth

Counterpoint found the high-end smartphone sector grew 37 percent on the Chinese mainland in 2023, despite overall weakness in global smartphone sales.

Apple led the segment in the first half of the year, but its sales were under pressure starting in the third quarter due to competition from Huawei and other domestic competitors.

But Apple still ranked as China’s top smartphone vendor in the fourth quarter and all of 2023, IDC said.

Last week Apple reported a 13 percent revenue decline for the Greater China region, including the mainland, Hong Kong, Macau and Taiwan, for the December quarter even as sales rose in other geographic areas.

Apple sales pressure

TF Securities analyst Kuo Ming-chi said in a research note that Apple’s smartphone shipments in China have declined 30 to 40 percent in recent weeks.

“The main reason for the decline is the return of Huawei and the fact that foldable phones have gradually become the first choice for high-end users in the Chinese market,” he wrote.

Counterpoint said last month Apple had a dominant 71 percent of the premium smartphone segment worldwide, down from 75 percent in 2022 amidst competition from Huawei in China and Samsung in other markets.