Huawei Passes Apple in Smartphone Share for the First Time

(Bloomberg) -- Huawei Technologies Co. pulled ahead of Apple Inc. to claim the No. 2 position in global smartphone shipments in the second quarter just behind Samsung Electronics Co., solidifying the rise of Chinese competitors.

Huawei shipped 54.2 million phones in the quarter, 41 percent more than a year earlier, to jump ahead of the iPhone maker for the first time, according to market research firm IDC. The telecoms giant accounted for 16 percent of the market, compared with 21 percent for South Korea's Samsung and 12 percent for Apple. Xiaomi Corp. and Oppo, both based in China, rounded out the top five.

Chinese smartphone makers have been gaining influence as their domestic market grows and they expand abroad. Huawei has pushed into Europe and Africa, though it's failed to crack the massive U.S. market. Apple tends to sell iPhones at higher prices than its rivals and profits from services like iTunes, which helped it top earnings estimates for the quarter.

“The importance of Huawei overtaking Apple this quarter cannot be overstated,” said Ben Stanton, a senior analyst at Canalys, which also reported the shift in quarterly market share. “It is the first time in seven years that Samsung and Apple have not held the top two positions. Huawei's exclusion from the U.S. has forced it to work harder in Asia and Europe to achieve its goals.”

Read more about Huawei's inability to break into the U.S. market

Canalys pointed out that the second quarter has historically been a weak one for Apple. The Cupertino, California-based company introduces new phones late in the year, then usually sees sales climb in the fourth and first quarters. That momentum for the iPhone X, which starts at $1,000, wasn't sustained into the second quarter, the firm said.

Globally, the smartphone market continued its slowdown with shipments slipping 1.8 percent for the quarter to 342 million units. The number of smartphones shipped in 2017 fell 0.3 percent, according to IDC, the first decline after years of strong growth.

Read more: Apple Shares Jump on IPhone Sales Projection, Boost in Services

Samsung earnings took a hit from the sluggish market when it reported earnings Tuesday. The South Korean company, which makes memory chips and screens as well as smartphones themselves, reported net income that fell short of analysts' estimates.

“Huawei's momentum will obviously concern Samsung, but it should also serve as a warning to Apple, which needs to ship volume to support its growing services division,” Stanton said in a statement. “If Apple and Samsung want to maintain their market positions, they must make their portfolios more competitive.”

To contact Bloomberg News staff for this story: Gao Yuan in Beijing at ygao199@bloomberg.net

To contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Reed Stevenson

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