Huawei doubles down on smartphones as EV sales slow

Huawei's Smartphone Resurgence

Huawei's decision to aggressively re-enter the smartphone market, particularly with its new Mate 90 series powered by proprietary "LogicFolding" chips, represents a significant strategic pivot. This move is directly aimed at recovering the substantial overseas market share lost following U.S. sanctions imposed in 2019. These sanctions not only cut off access to Google's Android operating system but also disrupted the supply of critical semiconductors, severely impacting Huawei's consumer business. The company's executive director, Richard Yu, has openly stated the goal of regaining international footing, a stark contrast to its current reality of selling only a few million smartphones outside China annually. The expansion of its HarmonyOS to international markets within the next three years is a key component of this strategy, aiming to build a self-sufficient ecosystem independent of foreign technologies. The success of this endeavor hinges on China's evolving chip manufacturing capabilities, which Huawei hopes will eventually support the global sales of devices built with its own silicon.

The Electric Vehicle Slowdown

Concurrently, Huawei's foray into the electric vehicle (EV) sector, a business unit that generated at least $6.7 billion in revenue in 2025, is encountering significant headwinds. Unlike the rapid export growth seen by other Chinese EV makers, Huawei-powered vehicles remain largely confined to the domestic market. The company's role is primarily as a technology provider, supplying software interfaces and driver-assist systems rather than manufacturing the vehicles themselves. However, the broader Chinese auto market is experiencing its worst performance since 2021, with overall sales declining by over 20% in the first three quarters of the year. New energy vehicles, including battery and hybrid models, have seen a 13% drop in sales during the same period. Huawei's own auto tech software system, HIMA, has reported a substantial 29% decrease in vehicle deliveries in September compared to the previous year, a stark contrast to the double-digit growth achieved by market leaders like BYD and Leapmotor. This slowdown is reflected in the stock performance of partners like Seres Group, whose shares have plummeted over 60% year-to-date, despite a recent five-year cooperation extension.

Strategic Interplay and Market Dynamics

The contrasting trajectories of Huawei's smartphone and EV businesses underscore the complex and dynamic nature of the global tech and automotive industries. The renewed emphasis on smartphones, driven by a desire for technological self-reliance and market recovery, suggests a calculated risk to leverage its core competencies and overcome past geopolitical challenges. The company's long-term vision involves building a robust, integrated ecosystem across devices and software, with HarmonyOS playing a central role. Meanwhile, the struggles in the EV sector, despite significant investment and strategic partnerships, highlight the intense competition and evolving consumer preferences within China's rapidly maturing new energy vehicle market. Huawei's ability to navigate these dual challenges will be critical in determining its future growth and influence across these key technology sectors. The company's commitment to its EV partners, as evidenced by the extended cooperation with Seres, indicates a continued, albeit challenging, pursuit of innovation in automotive technology.