Bigger Sales than Apple? China’s Huawei Doesn’t Need US

Smartphone sales are falling globally, but a Chinese tech giant whose devices most Americans can’t even buy is doing a booming business, while nipping at the heels of Apple Inc.

Huawei Technologies Co., the world’s largest maker of telecommunications equipment, shipped more than 95 million smartphones in the first half of the year, an increase of more than 30% compared with the same period last year, the company said Friday. The company’s sales have risen sharply in markets such as Western Europe, the Middle East and India, according to International Data Corp.

In the second quarter, Huawei shipped more phones globally than Apple, making it the world’s second-largest vendor of smartphones after Korea’s Samsung Electronics Co. , according to IDC. The period before the launch each fall of the newest iPhone is traditionally Apple’s weakest.

Huawei sells few phones in the U.S. The company has been effectively banned from selling telecom gear there ever since a 2012 Congressional report alleged its gear posed a national security threat. Since then, network operators, the gatekeepers of the U.S. cellular phone market, haven’t partnered with Huawei to sell its phones.

Huawei has long denied it is a threat and says it is owned by its employees. The company was close to a deal to sell smartphones in the U.S. in partnership with AT&T Inc. earlier this year, but AT&T walked away from the deal at the last minute, The Wall Street Journal reported.

Huawei, headquartered in the southern Chinese tech hub of Shenzhen, has made inroads elsewhere: It is the No. 3 smartphone vendor in Europe, and is No. 1 in its home market of China. Its flagship phone, the P20, has a model featuring a triple-lens camera and has impressed reviewers.

“They’ve been consistently putting in the marketing to improve their branding,” said Melissa Chau, an analyst at IDC.

Huawei’s sales have climbed despite facing a shrinking global smartphone market. Shipments for the industry overall fell 2.6% in the first half of the year, according to IDC. Despite pulling ahead of Apple, most of Huawei’s gains came at the expense of Samsung and other smaller vendors whose phones run on the Android operating system, Ms. Chau said.

On Tuesday, Huawei said its unaudited revenue rose 15% to 325.7 billion yuan ($47.6 billion) during the first half of the year. Apple reported revenue during that time of $114.4 billion, according to S&P Capital IQ—a difference partly due to Apple’s fatter margins. Huawei phones fetch a lower price, with an average price of $269 compared with $848 for Apple, according to IDC.

Huawei’s success has put it in the crosshairs of U.S. policy makers recently. The Federal Communications Commission is proposing to block Huawei from using federal funds to sell its telecom gear to one of its last remaining markets in the U.S.: small rural carriers. Huawei said the measure would hurt rural and low-income Americans.

Separately, the Justice Department is investigating whether Huawei violated U.S. sanctions on Iran, while the Department of Defense has pulled phones made by Huawei and its Chinese rival ZTE Corp. from U.S. military bases. – Business Standard