Today, Huawei’s consumer business CEO Yu Chengdong officially announced the performance of Huawei’s mobile phones in the first half of the year, with 104 million units shipped. Compared with the 118 million units in the first half of 2019, a year-on-year decrease of 11.9%.
This is also a rare year-on-year decline in Huawei’s mobile phone shipments over the years. However, the good news is that in the first half of the year, Huawei’s consumer business grew significantly in IoT products such as PCs, tablets, smart watches, and wearable devices, which also offset the decline in the mobile phone business.
Mobile phone shipments rarely decline, IoT is growing rapidly
A few days ago, a number of third-party organizations released data claiming that in the second quarter of this year, Huawei’s global market share of mobile phones surpassed Samsung and ranked first. On the one hand, Huawei has achieved rapid growth in the Chinese market. On the other hand, Samsung has suffered from the epidemic in advantageous markets such as Europe, America, and India, which has caused a serious decline in sales.
“Under the situation of sanctions, our hands and feet were constrained. Although it was an unfair game, we still won the world’s first place.” Yu Chengdong said. However, he admitted that under the continuous sanctions of the United States, the annual shipment volume of Huawei mobile phones may be less than 240 million units in 2019. “Our mobile phone business is now very difficult, chip supply is difficult, and it is out of stock.” He said.
In September this year, Huawei will launch a new generation of Mate40 series products, still equipped with Kirin chips. However, the US ban on the supply of Huawei chips will take effect on September 15, so Kirin flagship chips will be out of print by then. “Huawei has only been involved in chip design and has not entered into the manufacturing of chips with heavy assets. Kirin chips cannot be produced. This is very important to us. Big loss.”
Fortunately, Huawei achieved very satisfactory results in the IoT business in the first half of this year.
According to data released by Yu Chengdong, in the first quarter of this year, Huawei’s wearable products are No. 1 in China and No. 2 in the world, smart watches are No. 1 in China, and No. 2 in the world. In the second quarter of this year, Huawei’s tablet business is No. China’s second global market grew by 120% year-on-year, and TWS headsets worldwide grew by 50% year-on-year .
With the explosion of the IoT business, Huawei’s consumer business achieved sales revenue of 255.8 billion yuan in the first half of the year, a year-on-year increase of 15.85%. The overall revenue growth rate of the consumer business is still leading among Huawei’s three pillar businesses.
In addition to hardware, Yu Chengdong also specifically mentioned Internet services. Apple’s Internet service annual revenue exceeds 48 billion U.S. dollars, which is a very important source of Apple’s profits, with a net profit margin of over 60%. And Huawei’s annual Internet revenue is only 5 billion U.S. dollars. “It doesn’t look small, but this space is very large.”
Need to break through in core technologies such as operating systems and chips
With the supply of Kirin chips facing a cut-off, Huawei has added additional chip orders to MediaTek, and recently reached a patent license settlement with Qualcomm.
However, this does not fundamentally remove the risks faced by Huawei’s mobile phone business. Today, Yu Chengdong also called for Chinese companies to achieve innovation and breakthroughs in basic technological capabilities in order to break through the ban in the United States and win the next era.
He pointed out that in terms of semiconductor manufacturing, we must make breakthroughs including EDA design, materials, manufacturing, technology, design capabilities, packaging and testing, etc. “Whether it’s overtaking on a curve or overtaking in a halfway, we hope to achieve a lead in a new era. There is nothing impossible in the world, only not enough determination and not enough investment.”
Not only chips, Yu Chengdong believes that in the era of smart scenarios, Chinese companies also need to build capabilities in the standard ecology of operating systems, databases, cloud services, and IoT, and have deep roots for our ecological development.
He cited data as saying that China leads the United States in terms of the number of Internet users and application innovation. China’s smartphones, PCs, TVs, and other terminals have market shares that lead U.S. companies, but U.S. companies still dominate in operating systems and ecological platforms. world. For example, Google’s Android and Microsoft’s Windows dominate the OS ecology of mobile phones and PCs. Google and Apple are also the business rule makers of global mobile Internet services.
In the operating system and ecological platform, Huawei also has its own solutions: Hongmeng OS and HMS.
Huawei’s previous smart screen products have been equipped with Hongmeng OS, Yu Chengdong revealed that this year Huawei’s smart watch products will also be equipped with Hongmeng OS. In the future, all of Huawei’s IoT products, including PCs, tablets, and even mobile phones, may use Hongmeng OS. “Hongmeng OS will become a worldwide operating system in the future.” He said.
Xu Wenwei, director of Huawei and dean of the Strategic Research Institute, said that in the field of operating systems, Huawei believes that the leader of the future model should use openness against closedness and collaboration against separation. Huawei’s industry proposition is: open and open source, jointly build an OS ecosystem, and support distributed terminals in all scenarios.
In terms of HMS, Yu Chengdong revealed that there are more than 80,000 applications that integrate HMS services globally. In the first half of this year, Huawei’s terminal cloud service has more than 520 million monthly active users. “Our ecological experience is improving every month, week, and day, so that those who can only support Google GMS in the past can complete the integration of Huawei HMS in a few hours.”
“For us, the sanctions imposed by the United States are very painful, but at the same time it is a major opportunity that forces us to upgrade our industry as soon as possible.” Yu Chengdong believes that China must build the entire basic system capabilities of operating systems, ecological services, chips, etc. Get up, so that Chinese companies are not restricted by others, but also can participate in global competition and earn more profits.
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