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“Passage of this death sentence does not involve a swift execution,” technology analyst Dan Wang said in a client note. “Instead, the process is much more like a slow strangulation.”
Huawei declined to comment.
Wang said Huawei will feel the impact most acutely in its consumer business, which brought in 54% of revenue in 2019.
In November, Huawei spun off budget smartphone line Honor in a sale founder Ren Zhengfei said would allow the brand to regain access to chips. Huawei could look to do the same with its premium lines this year, Triolo said.
Huawei was the world’s biggest smartphone maker as recent as the second quarter of 2020, but the Honor sale and chip shortage will likely take it out of the top six this year, said data firm Trendforce.
Its luck may change with the U.S. presidential inauguration of Joe Biden, from whom analysts expect more leniency towards Huawei’s smartphone business. The inauguration this month comes as Chief Financial Officer Meng Wangzhou discusses a deal with U.S. prosecutors over allegations of doing business with Iran.
In the meantime, Huawei will likely focus on the Harmony operating system it is developing for its smartphones after being cut off from Alphabet Inc’s Android, said Nicole Peng, VP of Mobility at consultancy Canalys.
Elsewhere in software, Huawei will likely pivot more towards services such as cloud computing and internet-of-things devices, though these are unlikely to offset slowdown in smartphones and telecommunication infrastructure, analysts said.
Huawei’s network business does have bright prospects, but with major markets such as Britain and Japan banning its equipment, it will likely focus on China, analysts said.
The company has enough chips to make around 500,000 5G base stations, said Jefferies analyst Edison Lee. Yet rather than use up that supply, the government will likely slow 5G introduction, taking “a middle-of-the-road approach to balance between expanding coverage and waiting for Huawei to catch up,” he said. (Reporting by David Kirton; Editing by Christopher Cushing)