HUAWEI is making a play for headphone dominance despite US sanctions

The past five years have been nothing short of turbulent for HUAWEI. The US introduced the colloquially named “HUAWEI ban” on May 15, 2019. Until recently, the company had been battling slumping international and domestic sales. However, new filings to China’s National Interbank Funding Center show the Shenzhen-based company’s net profit rose 19.7 billion Chinese yuan ($2.7 billion) in Q1 of 2024. This is up 564% from a year earlier. It did not reveal the breakdown of specific business units, such as consumer and smart car components. However, its headphone line will have likely contributed to the uptrend. Despite pressure from the US, the company continues to show it can navigate a world without support from Western technology conglomerates like Google. With declining Apple sales in China and a proven track record of challenging Samsung, could HUAWEI reappear as an attractive alternative in the international headphone market?

No way, HUAWEI

HUAWEI is a relatively young company in the grand scheme of things. Established in 1987 after Ren Zhengfei was discharged from China’s People’s Liberation Army, Zhengfei’s military history helped HUAWEI secure some of its first major contracts. However, HUAWEI has since faced consistent international scrutiny for allegedly stealing intellectual property from other companies. Yet despite this, HUAWEI entered the consumer electronics arena in 2016 with great success. For example, its smartphones were immediately popular for their pleasing designs and reasonable price tags.

At the time, HUAWEI boasted it would become the world’s largest smartphone manufacturer within five years. By 2018, it had taken second place ahead of Apple and was closely trailing Samsung. By all accounts, it was widely expected to make good on its promise by the end of 2019. This would have overthrown Samsung as the leading player for the first time since 2011.

However, everything stalled in May 2019 when then-US president Donald Trump signed an executive order banning telecommunications equipment from foreign firms deemed national security risks. While the ban only affects products released after May 15, 2019, it remains in perpetuity and has faced little resistance from the Biden administration. This has forced HUAWEI to pivot its business practices. It also encouraged Google to bar HUAWEI from using its suite of digital products. Subsequently, fans can no longer access Gmail, YouTube, Google Drive, or the Google Play Store from newer HUAWEI smartphones. Other US-based companies have followed suit. From Qualcomm, Intel, Arm, and Microsoft, HUAWEI is increasingly isolated from Western technology companies.

In recent years though, the US government has enacted a licensing system for US firms that want to work with HUAWEI. In particular, Qualcomm, Samsung, and Sony can sell specific manufacturing parts to HUAWEI. However, the company launched its own Harmony OS NEXT in August 2023. This removes the Android layer and strips HUAWEI devices of Android-based applications. Perhaps unsurprisingly, this has led to a downfall in international sales.

My way or the HUAWEI

Apple is still the player to beat regarding headphones. AirPods frequently top international sales. Apple’s Wearables, Home, and Accessories category also consistently outstrips its Mac and iPad segment. This is shown by the listing profiting $7.9 billion in Q2 of 2024. However, this marked a roughly 10% fall on the previous quarter’s earnings of $8.8 billion. Tim Cook (Apple’s CEO) attributes this to a difficult comparison on Apple Watch and AirPods.

In another show of strength, HUAWEI’s Harmony OS exceeded Apple’s iOS market share in China in Q1 of 2024, selling 900 million consumer devices. Domestically, HUAWEI smartphone sales increased from 9.3% to roughly 16% in 2023 — a roughly 70% improvement. Conversely, Apple’s share in China fell to 15.7% in Q1 of 2024 from 19.7% a year earlier, splitting the market virtually evenly with HUAWEI. Apple has since cut prices for Chinese customers to stay in the race.

Other Western consumer electronics manufacturers fare worse than Apple. For example, Samsung recorded a $2.3 billion turnover for its Harman category in Q1 of 2024. Preliminary data from Sony’s recent Consolidated Financial Results shows that its Audio and Visual sales for Q1 of 2024 hit just over $0.5 billion. This seems markedly low. We must wait for more details when the company unveils its Q1 Earnings Announcements on August 7, 2024.

While HUAWEI’s geographical revenue stream has struggled since the US ban took effect in 2019, its domestic sales remain resilient. For example, the company earned $97 billion at home in 2023, with $35 billion generated specifically from its consumer business segment. This is up roughly 9.6% overall and 17% in its consumer category from a year earlier. Abroad, HUAWEI enjoyed an income of $6.6 billion across the Americas in 2018. This was even higher in Europe, the Middle East, and Africa (EMEA,) reaching $28 billion. This fell sharply in 2020 though, hitting just $5.5 billion in the US and $25 billion across the EMEA respectively. In its most recent yearly accounting, HUAWEI raised just $4.9 billion in the States and just over $20 billion across the EMEA.

Time to Free(the)Buds?

It’s much more difficult to purchase HUAWEI products in the US than it used to be. However, fans outside the US and those who find a workaround may be pleased with what’s on offer. For example, HUAWEI’s latest FreeBuds 6i ($89 at Amazon) have 11mm dynamic drivers and support the SBC, AAC, LDAC, and L2HC Bluetooth codecs. The last is HUAWEI’s proprietary connection and profits up to 960kbps, 44.1kHz/ 24-bit audio sampling. The buds also benefit from powerful noise canceling that attenuate an average of 27dB between 50Hz and 20kHz. They are also IP54-rated to protect against omnidirectional water splashes and small solid objects. The FreeBuds 6i last five hours with ANC enabled and benefit an extra 20 hours from the charging case. They also work with the HUAWEI AI Life app (Android/ iOS) to conduct firmware updates, edit the EQ, and customize controls.

It isn’t just in-ear buds that HUAWEI has to offer, though. The company’s recent FreeClip ($199 at Amazon) open-ear buds are a spherical take on the Bose Ultra Open Earbuds. Wearing a similar clip-on design, the HUAWEI FreeClip leave your ears unoccluded to maintain situational awareness. This build is often more popular among athletes and cyclists than open-fit buds like the AirPods (3rd Generation) and HUAWEI FreeBuds 5. The FreeClip wear an IP54 water- and dust-resistant rating and weigh just 5.6g. The buds last eight hours on a single charge and the case profits an extra 24 hours of playtime. Those who frequently find themselves on Zoom calls will enjoy the buds’ ability to block out distracting environmental noises. Android and iOS fans can also download the HUAWEI AI Life app to install vital firmware updates and utilize other flagship features. Unfortunately, the buds do not support active noise canceling.

HUAWEI has many other offerings, including the FreeBuds Pro 3 ($189 at Amazon) and FreeBuds SE 2 ($49 at Amazon.) The former adorn an AirPods Pro aesthetic and offer a list of pleasantries including powerful noise canceling, adaptive EQ, and four ear tip sizes. The latter are the company’s affordable alternative and profit an IP54 resistance rating, Bluetooth 5.3, nine hours of battery life, and compatibility with the HUAWEI AI Life app.

But what do you think? Is HUAWEI’s recent resurgence at home indicative of the company again emerging as an international contender in the headphone arena, or is it doomed until the US lifts its sanctions? Let us know in the poll below.