Six months ago, I published some market share numbers showing that Huawei’s revenue had dropped significantly.
There has been some controversy over this… but Huawei’s earnings announcement this week has essentially confirmed our view that Huawei’s market share in the telecom market plummeted in 2021.
Our closing numbers for 2021 actually placed Huawei behind both Ericsson and Nokia for the year in terms of RAN revenues. They’ve dropped from 35% share to only 21% share of the RAN market.
Huawei’s fall from the throne is directly tied to their difficulty in buying semiconductors in the "cold trade war" between China and the United States, and the current wartime environment does not seem like the friendly atmosphere that’s necessary to rebuild trade ties. So this may be the new "normal" for Huawei.
The most interesting part about Huawei’s financial release this week was the incredible rise in profitability they reported. Huawei’s revenue dropped by 28.6%, but their profits rose by 75.9%.
As a Silicon Valley start-up jockey, I have seen some crazy numbers but this one takes the cake! In a technical business with highly skilled R&D staff, this rise in profitability borders on being mathematically impossible, because many of the company’s costs are fixed.
Now, it’s possible that Huawei has laid off tens of thousands of R&D engineers but I don’t believe that’s the case. I would have heard about it if 20,000 5G software engineers were suddenly unemployed.
The only other way to explain this unlikely rise in profits is to include huge government stimulus in offsetting Huawei’s overhead and R&D costs.
As we reported in our RAN market share tracking over the past six months, we have been taking out government R&D grants and base station subsidies in an attempt to report on the true "recognizable revenue’" in the mobile market, according to the types of base stations sold and generally accepted accounting principles.
We stand by our assertion that Huawei’s market share is lower than their Western competitors.
Joe Madden is principal analyst at Mobile Experts, a network of market and technology experts that analyze wireless markets.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.