Huawei, which suffered a heavy blow in 2020, may see its influence weaken in 2021

Analysts say Huawei’s 5G business is likely to slow this year as it pushes further into software, while hoping the impact of U.S. sanctions on its smartphone business eases.

They say restricted access to high-end semiconductors means Huawei will face rationing as China's network upgrades, while splitting off its mobile division while it continues to develop a proprietary operating system would cause Huawei to fall sharply down the rankings.

The United States placed Huawei on a trade blacklist in May 2019 on national security grounds, and Huawei has repeatedly denied that it poses a risk. This effectively prohibits American companies from selling necessary American technology to Huawei. In August last year, the ban was extended to major suppliers such as TSMC.

Paul Triolo, head of global tech policy at Eurasia Group, said the changes hit Huawei’s Achilles’ heel because it relies on TSMC to make high-end chips for its phones, 5G network base stations, servers, cloud computing and artificial intelligence products. Inventories can only last so long, he said.

“The approval of the death penalty does not mean that it will be carried out soon,” technology analyst Wang Dan said in a note to clients. “On the contrary, the process is more like a slow strangulation.”

Wang Dan believes that Huawei's consumer business will feel the most obvious impact, which accounted for 54% of Huawei's sales revenue in 2019.

Huawei's luck may change with Biden taking office as US President. Many analysts expect Biden to be more lenient towards Huawei's smartphone business.

Nicole Peng, vice president of mobile business at consulting firm Canalys, said that after being cut off from support for the Android system, Huawei will focus on the Hongmeng operating system it has developed for its own smartphones.

Some analysts said that in terms of software, Huawei will likely focus more on services, such as cloud computing and Internet of Things devices, but this is unlikely to offset the slowdown in its smartphone and telecommunications infrastructure businesses.

Analysts point out that Huawei's network business does have bright prospects, but with major markets such as the UK and Japan banning Huawei equipment, Huawei will focus on the Chinese market.

Edison Lee, an analyst at Jefferies, said Huawei has enough chips to produce about 500,000 5G base stations. But rather than use up those supplies, he said, the Chinese government is expected to slow the rollout of 5G and take a "middle-of-the-road approach, balancing expanding coverage while waiting for Huawei to catch up."

We don't need to say much about Huawei's experience in 2020. The most difficult point for Huawei's mobile phone business now is that Huawei can't make chips. Not only that, in addition to not being able to make chips, Huawei can't buy chips. It used to cooperate with MediaTek to buy chips, but now it can't do it. Qualcomm and MediaTek's application for cooperation with Huawei has not been approved. They said that TSMC's mature processing technology can be used, but mobile phone chips are the most advanced technology, so it really doesn't help Huawei's mobile phone business.

Global smartphone shipments will grow 9% this year to 1.36 billion units. The top six smartphone manufacturers this year are Samsung, Apple, Xiaomi, OPPO, vivo and Transsion. Huawei can only rank seventh, which is really a pity.