Huawei has tiny presence in US, huge global footprint

  • A man looks at his smartphone Friday as he walks past an electronics shop advertising phones from Huawei and Apple in Beijing. Stepping up a propaganda offensive against Washington, China's state media on Friday accused the U.S. of seeking to "colonize global business" by targeting telecom equipment giant Huawei and other Chinese companies.

    A man looks at his smartphone Friday as he walks past an electronics shop advertising phones from Huawei and Apple in Beijing. Stepping up a propaganda offensive against Washington, China's state media on Friday accused the U.S. of seeking to "colonize global business" by targeting telecom equipment giant Huawei and other Chinese companies. Associated Press

 
 

Brittney Jones is something of a rarity among U.S. smartphone users. She prefers Huawei.

She is part of such a small group that the 27-year-old Olympia, Washington, resident says she has never met another Huawei owner, save for the man she bought the handset from for $800 in cash last year after seeing a listing on Craigslist.

Jones bought the device, she said, because of its superior front-facing camera, perfect for taking selfies. "I didn't really care what the name was," said Jones, a student, who researched the phone online. "It's not fair that we don't have access to the best technologies in the U.S. I should be able to just go to the store and buy the best phone out there."

Huawei -- pronounced "hwa-way" -- has 0.03% of the U.S. market share for handset sales, according to Gartner, and is available primarily on Amazon. But abroad, it is a giant and, until a kerfuffle with the Trump administration this month, was on a clear path to overtake Apple as the second largest seller of mobile phones in the world for the year.

"They are as good or even better than Samsung, but for a lower price," said Roger Entner, an analyst for Recon Analytics. Its phones like the P30 Pro, available to Americans for about $900 on Amazon, have garnered generally positive reviews. Like Samsung's, Huawei phones run on Google's Android operating software.

Huawei's microscopic U.S. market share -- far behind Apple, Samsung and LG -- is due largely to a roughly decadelong spat with the U.S. government over allegations such as espionage, trade violations and intellectual property theft. Huawei booked about $107 billion in sales last year, up 20% from a year earlier, with nearly half of that coming from its consumer business, which includes smartphones. The rest of its revenue comes from other divisions selling 5G network equipment, as well as services like cloud computing. By comparison, Boeing posted $101 billion in sales in 2018.

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U.S. officials believe Huawei maintains close ties to the Chinese government. The company says it is owned entirely by employees. Huawei has steadfastly denied the U.S. allegations, to little effect. Huawei didn't immediately respond to requests for comment.

A 2012 congressional report contended that Huawei's telecom equipment, including gear essential for deploying 5G networks, posed a national security threat. As a result, U.S. carriers like AT&T and Verizon haven't offered Huawei's mobile phones for sale. Other companies have also taken action against Huawei: As long ago as 2003, Silicon Valley firm Cisco sued the Shenzen-based company on charges that Huawei stole software code for routers and network switches.

Meanwhile, the U.S. has sought to extradite from Canada Meng Wanzhou, Huawei CFO and daughter of the company's founder, over fraud charges.

The dispute with the U.S. reached a boiling point earlier this month, when the Trump administration said it would ban U.S. firms from providing components or services to Huawei, effectively preventing it from manufacturing phones or other equipment. Google said complying with the ban would mean future phones sold by Huawei would be without a license for its Android operating software and would have no access to its Play app store.

A similar sanction last year on Chinese firm ZTE, over alleged trade violations, crippled it and forced it to accept a $1 billion fine, among other penalties. The device-maker's U.S. smartphone market share has crumbled in recent years, analysts say, representing a tiny fraction of leaders Apple and Samsung.

                                                                                                                                                                                                                       
 

Just a few years ago, Huawei was ascendant in the U.S., gaining market share by offering handsets to lower-income customers on prepaid plans. It sponsored a 2013 U.S. tour by the teen heartthrob Jonas Brothers, with executives spinning up plans to be "a leading smartphone brand."

That has largely come true -- just not in the U.S., the world's third largest smartphone market after China and India. In this year's first three months, Huawei sold 59.1 million smartphones globally and had a 19% market share, up from 12% a year earlier, making it the second largest ahead of Apple and behind Samsung's 23%, according to IDC data. As recently as last year's fourth quarter, Apple held the second spot by market share. Huawei's increase was all the more notable because industrywide growth in smartphone sales has declined for six straight quarters, the IDC said.

Because of the U.S. ban on American companies supplying to Huawei -- which could come into effect in August after a 90-day reprieve -- subsequent Huawei devices are likely to be without popular Google apps like Gmail and YouTube. Huawei would have to seek publicly available versions of the Android operating software, rather than getting them directly from Google.

Existing Huawei customers will continue to be able to download the latest versions of Google apps, the U.S. search engine company said.

Huawei has said it can deploy mobile operating software it has been developing on its own if it needs to. CEO Ren Zhengfei struck a defiant tone on Chinese state television earlier this week, saying the 90-day reprieve was of little value.

                                                                                                                                                                                                                       
 

In the meantime, Silicon Valley firms could face skimpier sales of routers, computer chips and other components they typically ship to Huawei, which spent $11 billion buying from U.S. companies out of its roughly $70 billion budget last year.

Microsoft, which had offered Huawei laptops on its website, recently pulled them, according to reports.

Firms like Qualcomm and Intel, as well as smaller companies supplying Huawei with components, have seen their shares slip in recent days.

Jones, the U.S. Huawei fan, worried that her P20 Pro smartphone would falter amid the international dispute. "I can't live without my phone," she said. "I absolutely love it."

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