Despite feeling impacts in 2021 from a U.S. government clampdown, Huawei still led the global telecom equipment market by far during the first three quarters.
In Q1-Q3 market takeaways from Dell’Oro group, the firm said ongoing efforts by the U.S. to curb the Chinese vendor started to appear in Huawei’s results, particularly outside of China.
“At the same time, Huawei continued to dominate the global market, still nearly as large as Ericsson and Nokia combined,” wrote Dell’Oro analyst Stefan Pongratz. Cumulative revenues for the telecom market were around $100 billion.
Together seven vendors captured around 80% of the global market share, which Dell’Oro said remained relatively stable.
Nokia and Ericsson each had around 15% share of total revenues, compared to about 29% for Huawei alone. Another 20% or so was taken by ZTE (11%), Cisco (6%), Samsung (3%) and Ciena (3%).
Still, compared to 2020 Huawei is losing some ground, according to Dell’Oro. Amid a U.S. push to keep Huawei out of 5G networks over security risks, other governments made moves to exclude or limit the Chinese vendor including the U.K. last year.
Meanwhile, Dell’Oro sees ZTE and Samsung on an upswing year-to-date with Samsung gaining a percentage point driven by share gains in the RAN business, according to Pongratz.
Overall the telecom equipment market neared double-digit year over year growth for the first nine months. Dell’Oro estimates 9% growth in total equipment revenues year to date versus 2020, with 6% growth in Q3. The report covers equipment segments of broadband access, microwave and optical, transport, mobile core network and RAN, SP router and switch.
Huawei’s lead in the equipment market contrasts its consumer smartphone business, which was hurt by U.S. sanctions and earlier placement on the Commerce Department’s Entity List in 2019.
Huawei held 17% share of global smartphone shipments in the first quarter of 2020 but contracted rapidly after Q2 2020, declining to just a 4% share in Q1 2021, according to Counterpoint Research. It spun off its budget smartphone brand Honor so it could survive and gain access to key components that were cut off as part of U.S. actions – after which Honor in August became the third-largest smartphone brand in China in the low-mid-segment with 15% share. Apple in October moved to the No. 1 position in China with 22% share of smartphone sales in the country, ahead of Vivo and Oppo, as well as Huawei who trailed the premium smartphone market with just 8% share.
Huawei’s Q3 results showed trouble in the consumer business as overall sales plunged 38%. Huawei didn’t break out its quarterly results by business segment, but attributed revenue declines to consumer.
"Overall performance was in line with forecast," said Guo Ping, Huawei's Rotating Chairman in a statement. "While our B2C business has been significantly impacted, our B2B businesses remain stable.”
In the first three quarters Huawei still generated revenue of CNY455.8 billion ($71.5 billion) with net profit margin of 10.2%. That compares to network equipment rivals Ericsson and Nokia which in the first nine months of 2021 reported respective net sales of SEK 161 billion ($17.78 billion) and EUR 15.788 billion ($17.85 billion).
On the telecom gear market front, Dell’Oro said positive Q3 momentum was driven by strong growth in RAN and broadband access including surging demand for 5G and fixed wireless access CPEs.
Near-term growth is expected to slow down in the face of a resurgence of the pandemic and less supply chain visibility, according to Dell’Oro. The firm projects 2% market growth for telecom equipment in 2022, down from 8% in 2021.
Updated with market share percentages from Dell'Oro for top seven vendors.