Huawei has started to restructure itself internally, with a focus in the near future on expanding the business with mobile network technology rather than launching and the sale of smartphones. Trump and the coronavirus are to blame. As the Japanese business service Nikkei Asian Review reports, Huawei wants to invest less in the purchase of smartphone components and instead focuses more on the Group’s other core business: the development and sale of hardware for mobile radio networks.
The background is allegedly the higher spending on important infrastructure planned by the Chinese government, which should help the economy in the “Middle Kingdom” to recover as quickly as possible from the effects of the coronavirus pandemic. President Xi had mandated that more money flow into 5G and other networks, as well as capacity building in data centers.
Huawei’s Smartphone parts purchasing is reduced by up to 30 percent
Huawei had already started to prefer the network division when shopping, but according to the report, the company has now reduced its purchases of smartphone components for the period between April and June by up to 30 percent. This also includes components from the display area.
In any case, Huawei has already cut its forecast for the full year due to the impact of the US embargo on the company and the consequences of the coronavirus epidemic. The company expects “only” around 180 million smartphones sold. Compared to 2019, this would correspond to a decrease of 25 percent, since 240 million devices were sold last year.
Due to the slump in sales in China and many other regions, Huawei can now expect the first decline in its sales of smartphones – so far, things have been going up significantly every year. Meanwhile, the demand for the products of the network division remains high.
One of the reasons for this is that China is now starting to push ahead with the expansion of its 5G networks. In addition, expenditures for the expansion of mobile networks are flowing steadily, while the smartphone market is much more sensitive to the global development in the private customer sector, which has just been slowed down by the coronavirus.