Last week, Huawei Technologies announced its annual revenue topped US$100 billion for the first time in 2018 despite a campaign by the United States to ban the world’s largest telecommunications equipment maker.
The company has been fighting back, with its rotating chairman, Guo Ping, ridiculing Washington for adopting “a loser’s attitude” and urging it to compete instead of resorting to a smear campaign.
But while the Chinese giant is clearly determined to be the leader in the 5G mobile telecoms equipment market, the fact is that it is not. Huawei should focus on working to win contracts from operators, rather than just boasting to media about its “market dominance”.
In the past few months, Huawei has been under heavy attack from the US government, which has raised concerns that the company could allow the Chinese government to use the networks it is building for other countries for espionage.
Huawei has dismissed such allegations, noting that the US government is actually afraid of the company’s growing market share and leading position in 5G technology.
It is true that the Chinese equipment maker ranks first in terms of patent registration in 5G technology. But from a business perspective, Huawei is lagging behind other competitors in 5G network deployment.
In fact, analysts believe that while Huawei is downplaying the impact of the US campaign, the company is now suffering from the moves taken by the US government against it.
According to British market research house IHS Markit, Sweden’s Ericsson took the crown for the first time in two years as its share in the global 5G market in 2018 rose 2.4 percentage points to 29 percent, while Huawei saw its share fall 1.9 points to 26 percent.
The report said some countries have hesitated to make new purchases from Huawei amid the ongoing Sino-US trade war.
Ericsson controlled an overwhelming 68 percent share of the North American market, compared with Huawei’s 6 percent. Huawei held a 40 percent share in Europe, the Middle East and Africa, and 30 percent of the Asia-Pacific market, increasing its share in those areas by 2 percentage points.
Huawei was able to minimize the decline by strengthening its sales in areas where American calls for a ban of its products carried little weight, IHS Markit said.
Ericsson also had the largest share of expected shipments of 5G equipment at 24 percent, followed by Samsung Electronics, 21 percent; and Nokia, 20 percent. Huawei ranked fourth at 17 percent.
Meanwhile, the global telecoms infrastructure market shrank 18 percent to US$30.5 billion, with a major factor being the shift from 4G to 5G.
While industry figures show that Huawei is losing steam in the telecoms equipment market, the company continued to enjoy strong momentum, driven by its smartphone business.
Huawei’s revenue grew 19.5 percent to 721.2 billion yuan (US$107.13 billion) in 2018. Net profit was up 25.1 percent at 59.3 billion yuan. Revenue growth was faster than that seen in 2017, but the net profit rise was slightly slower.
For the first time in Huawei’s history, its consumer business generated more revenue than carrier business as a result of strong sales of smartphones such as the P20 and Mate 20 series, as well as other entry-level models for emerging markets.
Guo said 5G investments made by carriers will start this year, and industry digitalization opportunities and growing consumer demand will contribute to Huawei’s double-digit growth in 2019.
“Moving forward, we will do everything we can to shake off outside distractions, improve management, and make progress towards our strategic goals,” Guo said in a statement.
Huawei stressed that its products have no security issues and blamed the US and its allies for putting political pressure on the company to stop its growing influence.
However, a British government report issued recently said further significant technical issues have been identified in Huawei’s engineering processes, and this could lead to new risks in the UK telecommunications networks.
Meanwhile, Microsoft Corp found a loophole in Huawei’s laptop products, prompting the Chinese company to immediately upgrade the system.
These two developments could influence the decision of mobile operators around the world on whether or not they should use Huawei equipment for their networks.
Huawei is not the only equipment vendor in the 5G field. Amid the US campaign to deprive it of business and stiff competition from rivals, Huawei should double its efforts in clearing doubts in the market, both technically and politically, to gain the confidence of clients.