ZTE, Huawei expand their global telecom equipment shares, amid concerns over ongoing trade tensions
ZTE Corp and Huawei Tech have further expanded their respective market shares in global telecoms equipment market during the year’s first half. This is in spite of increased scrutiny over the security abilities of their devices & continuing China-US trade war tensions.
Huawei, a Shenzhen-based firm is the world’s biggest telecoms equipment supplier. The firm’s global share has reached 28.1%, up from the 27% it had during December last year, as per a report from Dell’Oro Group, a California based company. Dell’Oro was founded back in 1995, and happens to be an independent research firm, specializing in the telecoms sector.
ZTE, who is Huawei’s closest rival has grabbed a close 9.6% share during this same quarter, compared to 8% in Dec last year.
This market share surge has affirmed the increasing demand from China & other overseas markets for these 2 firms’ 5G network equipment.
With speeds 100x times faster compared to existing 4G networks, 5G is widely anticipated to enable the IoT revolution, smart cities, autonomous cars, and other mobile applications, which would establish the Internet’s industrial backbone.
More telecom network operators are now commencing their tests & deployment of next-gen mobile tech, as per financial results posted by HKSE-listed ZTE and Huawei.
Stefan Pongratz and Jimmy Yu, analysts at Dell’Oro mentioned that although Huawei had been cut off from the US market due to sanctions placed against it that limited its procurement of vital US components in the absence of a license, Huawei had managed to prevent its telecom equipment sales from being negatively impacted.
Huawei reported that its revenue for 2019’s first half had increased by 23.2%, reaching $56.1B or 401.3B yuan, compared to 325.7B yuan during this same period in 2019, which was driven by robust demand levels for the company’s 5G equipment and increased smartphone shipments.
While the firm has been struggling due to being placed on the U.S. trade blacklist, it was recently allowed a special reprieve for purchasing vital components from its US suppliers.
Yu & Pongratz from Dell’Oro stated that ZTE’s 10% market share achievement was impressive and demonstrated the firm’s customer loyalty levels.
The firm had grabbed the limelight last year, when the U.S. government placed sanctions against it for breach of terms made on a previous deal regarding trade sanctions. The firm has stopped major operations for over 4 months last year as it had been banned from purchasing services, software, and hardware from American firms.
The analysts mentioned that ZTE’s revenue figures had returned to former levels once the US ban period had ended.
ZTE declared a net profit of 607M yuan during Q1 2019, which was major rebound from the 2.4B yuan loss it had declared last year. Revenue figures for Q2 2019 increased 188% to 22.4B yuan, a major step up from the 11.9B yuan made during Q2 2018.
ZTE’s current tally of major 5G network gear supply contracts is more than what Sweden-based Ericsson had bagged. The latter had obtained over 22 5G network contracts. However, Huawei leads the pack, with 50 5G network contracts, whereas Nokia, a Finland-based company has over 43 contracts.
Ericsson and Nokia’s global telecoms gear market share during 2019’s 1st half was estimated at around 13.1% & 15.7% respectively, as per Dell’Oro. These figures were lower than what the companies had reported during Dec last year, which was 13.6% and 16.8% respectively for the two firms.
However, Pongratz and Yu warned that these approximations may not be an accurate reflection of the current industry situation as vendors such as Nokia tended to bag more orders throughout the year.
ZTE and Huawei aren’t expected to be making any significant moves in the U.S. anytime soon. Trump’s administration had issued a blanket ban, preventing U.S. federal agencies from purchasing services and equipment from Chinese firms like ZTE and Huawei, citing security issues.
Global 5G network infrastructure industry is predicted to reach around $22.5B by 2025, a massive leap forward from the $1.3B it was valued at last year, as per reports from Zion Market Research, a US-based firm.Source