Canalys’ base assumption is that restrictions will be imposed stringently on Huawei, once the 90-day reprieve expires, having a significant impact on its ability to roll-out new devices in the short term, especially outside of China. Canalys anticipates that Huawei is taking steps to mitigate the effect of component and service supply issues, but its overseas potential will be hampered for some time. The US and China may eventually reach a trade deal to alleviate the pressure on Huawei, but if and when this will happen is far from clear.
Canalys’ published forecasts reflect what will happen should there be no major political changes. “It is important to note that market uncertainty is clearly prompting vendors to accelerate certain strategies to minimize the short- and long-term impact in a challenging business environment, for example, shifting manufacturing to different countries to hedge against the risk of tariffs. But with recent US announcements on tariffs on goods from more countries, the industry will be dealing with turmoil for some time,” said Nicole Peng, VP, Mobility.
“We expect the other major smartphone vendors will have short-term opportunities while Huawei struggles. Samsung will be the biggest winner, thanks to its aggressive device strategy and its ability to quickly ramp up production, through the Korean firm may struggle to entirely fill the shortfall,” said Rushabh Doshi, Research Director, Canalys. “It will take other vendors until late 2019 to react to the new opportunities. Samsung’s control over component supply gives it a major advantage.”
Moving into 2020, most of the major mobile supply chain and channel will have active contingency plans to mitigate Huawei’s decline and be ready for 5G device roll-out in many markets. Canalys anticipates that 5G and other hardware innovations will be positive drivers for consumer demand and smartphone shipments globally are expected to return to soft growth in 2020, rising 3.4% to 1.39 billion. There will be subtle variations that will allow some regions to recover faster than others.
“Smartphone fatigue and a lack of meaningful innovation are still major market forces. Consumers are holding onto phones for longer. But as device lifecycles move toward a new equilibrium point, the rate of quarterly shipment decline will ease,” added Doshi.