Huawei's Struggles in European Telecoms

It has been a tough year for Huawei. And things will only get tougher.

In July, the UK government announced that UK carriers are banned from procuring new 5G equipment from ‘high risk vendor’ Huawei after the end of 2020, and must replace all Huawei 5G equipment in their networks by the end of 2027. This amends the original ruling in January that allowed Huawei limited (35%) presence in UK RAN and transport networks.

Given that all carriers in the UK currently use Huawei equipment with the exception of O2, this decision will inevitably delay the full roll-out of 5G in the country – potentially by as much as three years, and the associated costs of stripping out Huawei equipment could run into billions.

Across the rest of Europe, a growing list of carriers are also considering their options, and the removal of Huawei from their core networks is already underway. But doing so is not easy…or cheap. Vodafone for example is spending €200 million ($224 million) to extract Huawei from the core of its entire European operation. It will also take time: some carriers are much more reliant on Huawei than others (Sunrise Switzerland, for example, has a 100% Huawei 5G network) and issues around vendor incompatibility need to be carefully considered.

Huawei’s position in RAN is also at risk. European carriers may well follow the UK’s decision to remove Huawei from their RAN too, and there is growing momentum behind Open RAN technologies which aim to increase vendor competition: Telefónica has announced it will launch 4G and 5G Open RAN trials across its European operations this year, while Vodafone plans to open its entire European footprint up to tender in order to expand its supplier options and explore Open RAN technology. The Huawei saga will act as a catalyst to accelerate open RAN technology development, and adoption and may be further boosted by the introduction of statutory open RAN mandates by European governments.

The direction of travel, therefore, is clear: Huawei’s expulsion from all of Europe’s core networks seems to be a question of when, not if, and its European RAN business may be on the way out too. This will likely result in Europe playing catch-up in its 5G race with China and the US.

Meanwhile, Huawei’s consumer business has also been severely rattled in the last year. US sanctions blocked Huawei’s access to Google Mobile Services, meaning recent devices such as the P40/P40 Pro, Mate 30 series and Mate Xs must use open source versions of Android that exclude Google services such as Maps, YouTube and Gmail. Despite Huawei’s claim that their proprietary Huawei Mobile Services and AppGallery are worthy alternatives, the lack of Google services seriously impacts these devices’ appeal against competitors running a full commercial version of Android.

Huawei is also unable to work with semiconductor companies that use US technology, a list that includes Arm, Qualcomm and TSMC, the latter of which, until now, made most of the Kirin chips for Huawei’s own HiSilicon. And a further tightening of restrictions in August closed loopholes that allowed Huawei to obtain technology through third parties (e.g. by TSMC), either through alternative chip production or provision of off-the-shelf chips (e.g. from Qualcomm or MediaTek). With its inventory of chip and other components rapidly diminishing and assuming licenses to export merchant components to Huawei are not forthcoming, it is hard to see Huawei being able to produce any new smartphones at all in the second half of 2021.

So, why would European carriers want to stock Huawei devices? In the past, Huawei’s deep pockets ensured European carrier portfolios were chock full of Huawei smartphones, the most popular being the P30 which still accounts for a significant proportion of Huawei’s sales. However, this device is now over a year old, and with inventory running low, a lack of a worthy successor in the pipeline and consumer sentiment waning, Huawei is being squeezed out.

To exacerbate matters, COVID-19 has hit Europe hard. Most countries in Europe entered various stages of lockdown in March, and with physical stores closed and economic pressure leading to consumer belt-tightening, total smartphone sales decreased by 24% annually in Q2 2020. At the same time, Huawei’s market share dropped to 16% from 22% a year ago, with other Chinese vendors like Xiaomi and Oppo largely picking up the slack. Even though the market looks to be somewhat recovering, Huawei’s trajectory is ominous.

It would appear, therefore, that Huawei is fighting a battle on the European front that it just can’t win. Recently, Huawei management has been using an image of a Japanese plane from WW2 – shot full of holes but still flying – as an analogy for its current predicament. Its ability to keep the business running and even succeeding in Europe has been remarkable, but unless something changes, and quickly, it will see sales begin to drift lower.

There is, however, one glimmer of hope for Huawei: the US presidential elections. If Joe Biden enters the White House in early 2021, there could be an easing of sanctions as the Democrats seek a rapprochement over the US-China trade war. Huawei’s consumer business is likely to be the first to see an easing of pressure, with its infrastructure business benefitting only much further down the line. But even this scenario is not without its challenges. Even if Huawei does get a reprieve and is able to start building up again, the Huawei brand and public image outside of China could well have suffered irreversible damage. If Huawei does survive the next 12-24 months, it will be an uphill struggle (perhaps even an impossible task) to get consumers and businesses in Europe wanting to buy Huawei products again.

Jan is an Associate Director with Counterpoint Research, based in London, and leads the company’s research in Europe. He is a seasoned analyst with over 13 years’ experience in the TMT sector, most recently with GSMA Intelligence where he was responsible for key research deliverables and led a team of analysts producing highly impactful regional insights. Before that, Jan held strategy and analyst positions at Vodafone and Qualcomm, and started his career with research firm TNS (now Kantar).

Term of Use and Privacy Policy

Counterpoint Technology Market Research Limited


In order to access Counterpoint Technology Market Research Limited (Company or We hereafter) Web sites, you may be asked to complete a registration form. You are required to provide contact information which is used to enhance the user experience and determine whether you are a paid subscriber or not.
Personal Information When you register on we ask you for personal information. We use this information to provide you with the best advice and highest-quality service as well as with offers that we think are relevant to you. We may also contact you regarding a Web site problem or other customer service-related issues. We do not sell, share or rent personal information about you collected on Company Web sites.

How to unsubscribe and Termination

You may request to terminate your account or unsubscribe to any email subscriptions or mailing lists at any time. In accessing and using this Website, User agrees to comply with all applicable laws and agrees not to take any action that would compromise the security or viability of this Website. The Company may terminate User’s access to this Website at any time for any reason. The terms hereunder regarding Accuracy of Information and Third Party Rights shall survive termination.

Website Content and Copyright

This Website is the property of Counterpoint and is protected by international copyright law and conventions. We grant users the right to access and use the Website, so long as such use is for internal information purposes, and User does not alter, copy, disseminate, redistribute or republish any content or feature of this Website. User acknowledges that access to and use of this Website is subject to these TERMS OF USE and any expanded access or use must be approved in writing by the Company.
– Passwords are for user’s individual use
– Passwords may not be shared with others
– Users may not store documents in shared folders.
– Users may not redistribute documents to non-users unless otherwise stated in their contract terms.

Changes or Updates to the Website

The Company reserves the right to change, update or discontinue any aspect of this Website at any time without notice. Your continued use of the Website after any such change constitutes your agreement to these TERMS OF USE, as modified.
Accuracy of Information: While the information contained on this Website has been obtained from sources believed to be reliable, We disclaims all warranties as to the accuracy, completeness or adequacy of such information. User assumes sole responsibility for the use it makes of this Website to achieve his/her intended results.

Third Party Links: This Website may contain links to other third party websites, which are provided as additional resources for the convenience of Users. We do not endorse, sponsor or accept any responsibility for these third party websites, User agrees to direct any concerns relating to these third party websites to the relevant website administrator.

Cookies and Tracking

We may monitor how you use our Web sites. It is used solely for purposes of enabling us to provide you with a personalized Web site experience.
This data may also be used in the aggregate, to identify appropriate product offerings and subscription plans.
Cookies may be set in order to identify you and determine your access privileges. Cookies are simply identifiers. You have the ability to delete cookie files from your hard disk drive.