Huawei is BACK!!! Reclaims the No. 1 spot in the Chinese smartphone market after over three years

In a remarkable comeback, Huawei has regained the top position in China’s smartphone market after over three years, according to the latest data from Canalys. In the first quarter of 2024, Huawei’s smartphone shipments reached 11.7 million units, accounting for a 17% market share and a staggering 70% year-over-year growth. Canalys analyst Toby Zhu attributed Huawei’s success to the enthusiastic market response to its Mate and Nova series smartphones. The gradual improvement in production and supply of the Mate 60 series was a crucial factor driving Huawei’s overall growth.

History of Huawei’s fall

Huawei’s fall from the top spot in the smartphone market was a gradual process driven by a combination of external factors and internal challenges. In 2019, the U.S. government placed Huawei on the Entity List, effectively banning American companies from doing business with the Chinese tech giant. This prevented Huawei from using Google’s Android operating system and accessing crucial U.S. technologies, including semiconductors. The U.S. also pressured its allies to exclude Huawei from their 5G networks, citing national security concerns. Several countries, including the U.K., Australia, and Japan, banned or restricted Huawei’s equipment from their 5G infrastructure.

As a result of the U.S. sanctions, Huawei’s smartphone sales plummeted in China but mostly globally. The company was forced to sell its Honor smartphone brand in 2020 for 100 billion yuan ($15.2 billion). In 2021, Huawei reported its biggest-ever decline in revenue, with a 47% drop in its consumer electronics arm, which includes smartphones. The company’s overall revenue fell by almost 30% to 320 billion yuan (£35.5 billion) in the first half of 2021.

In 2022, Huawei reported its largest annual decline in profit since 2011, with a 69% year-over-year drop. The company attributed this to a challenging external environment, rising commodity prices, and strict pandemic controls in China. Huawei’s revenue remained flat in 2022, with a slight increase of 0.9% to 642.3 billion yuan ($90.3 million). The company’s consumer business, which includes smartphones, saw a more than 11% decline compared to 2021.

Hongmeng OS and Kirin Chips Fuel Huawei’s Comeback

Huawei’s strategy of equipping its smartphones with its own Hongmeng operating system and Kirin processors has paid off. The Nova 12 series, released in December, features Hongmeng 4.0 and supports two-way satellite communications, further expanding the application scope of Kirin chips and boosting performance in the mid-range price segment.

Moreover, Huawei’s recent upgrade of the P series to Pura 70, which incorporates breakthrough telescopic lens technology for improved imaging performance, has generated significant buzz in the market. With these strategic moves, Huawei has completed a full iteration of its mobile phone product lineup.

Huawei’s AI and Ecosystem Expansion

One of Huawei’s key strategies for 2024 is to build AI capabilities for smart terminals from the bottom of the hardware and software systems, drawing on its successful practices in the ICT and industry-level AI fields. As the Hongmeng operating ecosystem continues to expand, Huawei has gradually become the third-largest operating system for smartphones and other edge computing devices in the Chinese market, poised to challenge the duopoly of Android and iOS.

Competition Heats Up in China’s Smartphone Market

While Huawei’s comeback is impressive, other smartphone manufacturers are not sitting idle. OPPO’s outstanding performance with the Reno 11 series helped it quickly jump to second place, with shipments reaching 10.9 million units.

Honor, vivo, and Apple, which had aggressive shipments in the fourth quarter of 2023, have slowed down in the first quarter of 2024. Honor ranked third with 10.6 million units shipped, up 9% year-over-year, while vivo followed closely with 10.3 million units shipped, down 9% year-over-year. However, Apple experienced the largest drop among the top five manufacturers. The American company ranks fifth with 10 million units shipped, a year-over-year decrease of 25%.

Conclusion

Huawei’s return to the top of China’s smartphone market is a testament to its resilience and innovation. By leveraging its own operating system, processors, and cutting-edge technologies, Huawei has managed to regain the trust of Chinese consumers. This also helped the company to outperform its competitors. As the smartphone market in China continues to evolve, it will be interesting to see how Huawei and other manufacturers adapt to the changing landscape and compete for market share in the coming years.