Huawei CEO: Smartphone Market Has A Big Contraction Coming

The smartphone industry is due to get a lot smaller, according to consumer chief of China’s Huawei Technologies.

Speaking at Mobile World Congress earlier today (Feb 26) Richard Yu, chief executive of Huawei’s consumer business group, said that as the market gets tighter, anyone playing the field these days has a less than 10 percent chance of actually making money. Huawei, at present, is the third largest smartphone maker on Earth, trailing Samsung and Apple.  Its market share is a little over 10 percent.

“In the future, only three to four vendors can survive, maybe only less than four,” Yu told reporters following a product launch event held ahead of the Mobile World Congress.

The change in market, he suggested, is pushed by the consolidation of Chinese vendors who do not have enough power to their punch to go it alone.

“If your market share is less than 10 percent, you cannot be profitable. Over at 10 percent, at least, you can break even (and) over 15 percent you can make money,” he said.

Huawei’s smartphone business, he told the assembled, grew by around 30 percent in the last year. He also noted they are expecting faster growth this year.

Huawei could become the second biggest smartphone maker this year or next, and could even be #1 someday, he noted.

Huawei is not, however, launching a new flagship at this year MWC — instead, it’s holding the launch of its P20 flagship phone in Paris next month at a standalone event. Yu said Huawei plans to showcase a “big and bold” innovation in camera technology.

The device will compete head-to-head with Samsung’s new Galaxy S9 — launched here on Sunday — and Apple’s iPhone X.

Yu also said Huawei will launch its first 5G-ready smartphone either in the third or fourth quarter.