Huawei to drop out of top 6 smartphone vendors in 2021 after Honor jettison – analyst

Analyst house TrendForce has warned that Huawei will slip out of the top six smartphone vendors this year with shipments forecast to drop from 170 million in 2020 to 45 million.

Although Huawei continues to face headwinds as a direct result of US sanctions, the main factor in this expected drop is the sale of its Honor sub-brand to a newly formed consortium of partners and state-owned enterprises.

The Honor labelled handsets previously accounted for a significant share of Huawei's mobile output. In Q2 2018, 55 per cent of all phones sold by the firm carried Honor branding, according to analyst firm Canalys. By Q3 2020, that had shrunk to 26 per cent – a diminished but still sizeable chunk.

Honor is a volume business, targeting the low-to-mid tiers of the smartphone market. And while that alone is enough to take a healthy slice out of Huawei's shipment figures, TrendForce reckons that once unencumbered by US sanctions and able to access the global supply chain, Honor could become a competitive force.

"Huawei and the new Honor will be directly competing against each other in the future, especially if the former is somehow freed from the US trade sanctions at a later time. With the new Honor seeking to ramp up production, Huawei will have more difficulty in regaining market share for smartphones," the analyst wrote.

Still, there's no guarantees of success. One of the things that historically gave Honor a leg-up was its access to Huawei's R&D teams and homegrown mobile chipsets. This resulted in slightly weird scenarios where $400 mid-tier Honor phones would tout the same grade Kirin silicon as the current $1,000 Huawei flagship. We also saw affordable Honor devices with the same RYYB camera sensors as the Mate and P-series flagships.

After the divorce, that tight-knit co-operation looks set to cease: Huawei has already publicly distanced itself from the new Honor, describing it as a competitor and stating Huawei will not "be involved in any business management or decision-making activities in the new Honor company."

Huawei's mainline smartphone business remains dangerously imperilled, both at home and abroad. Although it has seen some success in licensing LTE chipsets from Qualcomm, it has otherwise been cut off from its historical silicon foundry partners, most notably TSMC.

Trendforce expects Xiaomi will replace Huawei in third place, behind Samsung and Apple, but ahead of Oppo and Vivo. It also expects Shenzhen-based smartphone maker Transsion will enter the top six rankings for the first time on the back of 60 million shipments, up from 55 million the previous year.

Transsion, which is virtually unknown both within China and the West, has made a name for itself by targeting consumers in Sub-Saharan Africa. In 2019, it began a push into southeast Asia, rolling out sales and manufacturing operations into Pakistan, Bangladesh, and India. ®