Being placed on the US Entity List has had fairly significant consequences for Huawei. Even though the company has been granted some form of reprieve for 90 days to allow it to support existing product and customers, its future products still remain in doubt.
A report this morning out of China indicates that Huawei has already scaled back its manufacturing capability.
According to the South China Morning Post, Foxconn has apparently stopped “several” production lines of Huawei smartphones in the past few days. This is because Huawei has reduced orders from new devices as its future is still unclear. Sources familiar with the matter couldn’t clarify whether this was a temporary measure or something more long-term.
While this could just be cyclic adjustment in Huawei’s manufacturing, it seems it probably isn’t. Back in February, there were reports that Foxconn had brought on extra employees to deal with the surge in Huawei product demand, and now just a couple of months later, that demand seemingly isn’t there.
Foxconn, the Taiwanese electronics manufacturer that assembles handsets products for many phone brands including Apple and Xiaomi, has stopped several production lines for Huawei phones in recent days as the Shenzhen company reduced orders for new phones, according to people familiar with the matter, who asked not to be named as the information is private.
It isn’t just media speculation this time around. Huawei’s US presence – under the Honor brand – gave a media briefing on Friday last week, indicating that the company was rethinking its major goals – including its ability to become the world’s largest smartphone manufacturer by 2020, and to overtake Samsung.
It doesn’t take much speculation to figure that losing access to Android – as well as key device certifications such as Bluetooth, WiFi and more – would make selling a successful smartphone a very difficult proposition.
It’s a big turn around for Huawei; the company has seen significant gains in demand for its products in recent years, surging ahead of Apple for some quarters before settling into place just behind.
Whether it can maintain this position – much less moving further ahead – remains clearly in doubt.