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Rival Chinese phones from Huawei Technologies, including Xiaomi, Oppo and Vivo, are taking aggressive steps to seize market share from their giant rival, after intensified US sanctions hampered Huawei’s supply chains, say experts from the firm. industry.
Last week, Huawei said it had sold its Honor budget-brand smartphone unit for an undisclosed sum in an attempt to safeguard the latter’s supply chain from US action, making it difficult to source components. essential.
Regardless, Huawei’s Chinese rivals smell blood in the mid- and high-end phone market. In August, a Huawei executive said the company will not be able to produce its flagship processors that power its high-end smartphones.
“What we can see now, whether from Xiaomi, Oppo or Vivo, is that they are increasing their forecasts for next year,” said Derek Wang, executive in charge of production at phone maker Realme, which shares a supply chain. with Oppo. .
“They believe that the sanctions against Huawei will harm it more or less in the international market, and they may want to take part of the market from Huawei.”
Founded in 2018, Realme is on track to double its smartphone shipments to 50 million this year, Wang said. It has built a base with low-priced offerings in Southeast Asia and India, and is looking to target Europe and China next. year with a push towards the high-end market, regardless of Huawei’s situation, Wang said.
In August, the US Department of Commerce further blocked Huawei’s access to essential US technology for its phone business, arguing that Huawei poses a security threat, a charge Huawei denies.
Huawei briefly surpassed Samsung as the world’s largest phone maker in the first half of this year, before shipments fell 23 percent to 51.7 million units in the third quarter, according to research firm Canalys.
Huawei still dominated 41.2 percent of the market in the third quarter, followed by Vivo with 18.4 percent, Oppo with 16.8 percent and Xiaomi with 12.6 percent, Canalys said. Apple has a smaller stake in China at 6.2 percent, but it is drawing strong demand for its iPhone 12 5G, Canalys said.
Industry observers have confirmed an increase in orders from suppliers. Xiaomi has been very optimistic, placing enough orders for up to 100 million phones between the fourth quarter of 2020 and the first quarter of 2021, 50 percent more than projections before the August restrictions, says consultancy Isaiah Research.
Oppo and Vivo’s production forecasts had also risen by about 8 percent each since August, with orders for up to 90 million and 70 million phones respectively, data from Isaiah Research showed.
By contrast, Huawei’s orders fell 55 percent to 42 million phones in that time.
All four companies declined to comment on the figures.
Xiaomi is also attempting to woo Huawei’s distributors in Southeast Asia and Europe in hopes of securing exclusive deals, and is actively targeting Huawei’s high-level market share in China, said a Xiaomi source familiar with the matter. .
Five industry sources on the supply chain side confirmed that they had an increase in orders from all three companies.
Some analysts believe the companies might be overly optimistic about their targets, but Realme’s Wang said component warehousing has also been boosted by production disruption caused by COVID-19 lockdowns earlier in the year and because Huawei’s decision to increase its inventories affected the supply of its rivals. chains
The rush to secure supplies has impacted the entire electronics chain, said Paul Weedman, supply chain project manager. “Prices have skyrocketed recently,” he said, noting that it has become much more difficult to obtain LCD screens even for tablets.
Analysts said Huawei’s sale of Honor may partly prevent competitors from intruding into the final market budget, provided Honor can resume supplying US technology.
“We still expect clear year-on-year growth from smartphone rivals Huawei and Honor in 2021, but probably at a lower ratio than their initial expectation.” said Flora Tang, an analyst at research firm Counterpoint.
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