"US Sanctions Cause 10% Decrease in Huawei Smartphone Production This Year"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Joselgina] The United States has imposed additional sanctions on Huawei, China's largest telecommunications equipment company, leading to forecasts that Huawei's smartphone production will decrease by about 10% this year.

According to market research firm TrendForce on the 22nd, Huawei's smartphone production this year is estimated at 170 million units. This is a 10.5% decrease from the 190 million units forecast released in May.

The additional sanctions, effective from the 15th, prohibit supplying products produced using U.S. equipment, software, or design technology to Huawei without prior approval from the U.S. Department of Commerce. As a result, global semiconductor companies including Samsung Electronics and SK Hynix have stopped selling semiconductors and related components to Huawei.

TrendForce expects Xiaomi, a Chinese smartphone competitor, to gain the greatest benefit from these sanctions. Xiaomi's annual production is estimated to increase by 11.2% from the May forecast of 130 million units to 145 million units. Other Chinese smartphone manufacturers Oppo and Vivo are also expected to see production increases of 7.7% and 3.8%, respectively.

TrendForce stated, "Huawei's smartphone sales are mainly concentrated in the Chinese market, so in the fourth quarter, Chinese competitors such as Xiaomi, Oppo, and Vivo will benefit," adding, "Among the three competitors, Xiaomi is the most proactive in procuring components."

Earlier, major market research firms including Strategy Analytics (SA) predicted that due to the additional U.S. sanctions, Xiaomi, Oppo, and Vivo would benefit within China, while Samsung Electronics and Apple would benefit globally.