Financial Markets Huawei went beyond Samsung as the international leader in smartphone deliveries thanks to its market share in China

• Huawei overtook Samsung as the leading worldwide mobile phone vendor by shipments in Q2 2020, representing the very first time a smartphone vendor besides Apple or Samsung has occupied the leading area in 9 years.
• Huawei gained from the comparatively strong performance of China’s economy in Q2 2020.

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Profiting from macroeconomic trends and its concentration of market share in China, Huawei overtook Samsung as the top international smartphone vendor by deliveries in Q2 2020, according to Canalys.

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This represents the first time a smartphone vendor aside from Apple or Samsung has actually occupied the leading area in 9 years. Huawei shipped 55.8 million gadgets in Q2 2020, representing a 5%year-over-year (YoY) decline. On the other hand, Samsung deliveries fell by a precipitous 30%YoY, shipping just 53.7 million gadgets in Q2.

Huawei benefited from the comparatively strong efficiency of China’s economy in Q22020 Even though China’s GDP contracted by 6.8%in Q1 2020, it managed to mount a recovery ahead of other significant markets in Q2 2020, when it posted 3.2%YoY growth in GDP, per CNBC. For a point of contrast, the US GDP fell by 9.5%in Q2 2020, the steepest decline since 1947, according to The Wall Street Journal.

Given this economic landscape, Huawei benefited its reliance on the Chinese market: 72%of Huawei devices delivered in Q2 went to consumers in Mainland China, and 7 out of every 10 mobile phones sold in China originated from Huawei in Q2, according to Canalys. Samsung’s smart device company is more diversified throughout markets, and it has essentially no market share in China– this gave Samsung higher direct exposure to the global financial crisis, though the South Korean tech giant said this week that it expects demand for smartphones to recover in the latter half of2020

Looking forward, we expect Huawei’s mobile phone deliveries will end up being even more restricted to China, as it integrates HarmonyOS into its gadgets. Huawei has had a really challenging time offering its gadgets beyond China given that the US cut it off from utilizing Google services in mid-2019

In 4 of the preceding 5 quarters, Huawei posted double-digit YoY decreases in smart device shipments outside of China, per Canalys estimates. Because the US-China tensions show no signs of abating, we anticipate Huawei will continue to pour resources into growing market share in China, while it basically handles an exit from foreign markets that heavily favor Google smart device services. This will align with Huawei’s technique to develop its HarmonyOS as a feasible alternative to Google’s Android platform, which will likely have limited appeal beyond China, requiring Huawei to rely even further on China for future growth.

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