Huawei sells smartphone rivals in China and tightens market grip in the middle of the US

By Sijia Jiang

HONG KONG (Reuters) – China's Huawei Technologies cemented its domination of the domestic smartphone market in the second quarter, with shipments and market shares rising, as Chinese customers supported the composite firm in the midst of its trade battle with the United States.

Huawei, which has been on a US trade blacklist since mid-May and was virtually barred from doing business there even before, sent 37.3 million smartphones in China in the three months ended June, up 31% year-on-year. year, according to market research firm Canalys.

Market share rose more than 10 percentage points to 38% in the quarter, although all other top suppliers lost ground in the world's largest smartphone market, Canalys data showed.

Huawei was added by Washington to a so-called Entity List in May. The blacklist has threatened to cut access to key US components and software such as the Google Android apps.

The addition to the list "caused uncertainty abroad," but the company has shifted its focus to the domestic market, investing in aggressive offline expansion to entice consumers with a patriotic sales pitch, said Canalys analyst Mo Jia.

Calls to support Huawei have consistently appeared on Chinese social media on comment threads that follow news about the company.

Kitty Fok, who tracks China's smartphone sector at research firm IDC, said consumers responded to the spat with Huawei with pro-China sentiment, which helped increase the brand's already strong appeal in the country.

"The product itself is already well recognized, and the trade war helped people feel that they needed to support Huawei. The only concern was that they might not get the component supply, but eventually they did," Fok said.

Huawei's second-quarter smartphone shipments rose even as general Chinese smartphone shipments shrank. Smartphone shipments in China fell by 6% in the quarter to 97.6 million units, the 9th consecutive fall, according to Canalys.

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China shipments in the second quarter represented 64% of Huawi's total smartphone shipments in the quarter, it said.

"Clearly, the international market is a risky one now, while Huawei in China, where the Android ecosystem is most mature in terms of sales channels and software revenue, has a clear advantage in price negotiations," said Canalys analyst Jia.

(Reporting by Sijia Jiang in Hong Kong; Additional Reporting by Josh Horwitz in Shanghai; Editing by Muralikumar Anantharaman)