Huawei starts selling used smartphones, license handset designs amid US sanctions

Josh Ye, South China Morning Post

Posted at Nov 23 2021 01:17 PM | Updated as of Nov 23 2021 01:20 PM

US-blacklisted Huawei Technologies Co is now selling refurbished smartphones and licensing its handset designs to partners amid the company's ongoing struggles to access advanced semiconductors for manufacturing its various devices.

Shenzhen-based Huawei last week started offering a number of reconditioned Android smartphone models - each with a brand-new battery, the firm's self-developed Harmony OS 2.0 platform and one-year warranty - on its online store Vmall.

A partner, TD Tech, also launched presales on Vmall of its smartphone named N8 Pro, which resembled Huawei's own nova 8 Pro 5G handset. The TD Tech handset is powered by the Kirin 985 5G chip from HiSilicon, the semiconductor design unit of Huawei.

Although the N8 Pro was quickly removed from Vmall after generating interest among consumers online, it showed that Huawei has already initiated efforts to license its handset designs to third-party vendors.

The sale of second-hand devices and the N8 Pro reflect Huawei's latest tactical moves to expand its revenue sources, while working to stay relevant in the global smartphone market.

Huawei said it had no comment.

Its move into the refurbished smartphone business is meant to engage Huawei customers, keeping them away from rival Chinese Android handset vendors, according to Nicole Peng, vice-president of mobility at research firm Canalys.

Peng, however, indicated that there are far fewer consumers in China who trade-in their smartphones, compared with those in the US.

Huawei had up to a 27 per cent share in mainland China's smartphone market at its peak in September last year, but accounted for only 7 to 8 per cent in the third quarter this year, according to Counterpoint Research senior analyst Ivan Lam, who expected that number to further decline this fourth quarter.

"Huawei sees a small increment, but a high turnover with its customer base," Lam said, indicating that the company is not capable of producing 5G smartphones in large volume any more.

Privately held Huawei, the world's largest telecoms equipment maker and formerly China's biggest smartphone vendor, was added to Washington's trade blacklist in 2019. It has scrambled to adapt its operations to tighter restrictions imposed last year, covering access to chips developed or produced using US technology, from anywhere.

In October, the company reported a 32 per cent slump in sales for the first nine months of this year, deepening to a 29.4 per cent decline in the first half, as its core smartphone and carrier telecommunications gear businesses were crippled by US sanctions.

While licensing handset designs has the potential of becoming a viable business, that could put Huawei partners like TD Tech at risk of US scrutiny.

"This is still a highly sensitive area," Counterpoint's Lam said. "Companies don't want to be in the spotlight."

Since late last year, Huawei has pursued initiatives to diversify its operations. These include expanding its cloud services operations in the Asia-Pacific region, supplying more 5G base stations and core network gear to China's major telecoms operators, increasing patent licensing deals, establishing partnerships for its HarmonyOS mobile platform and divesting its Honor budget smartphone business.

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