Huawei announced the release of HarmonyOS 4, its latest mobile operating system, and an upgraded A.I. assistant, as the company endeavors to rebuild its smartphone business following U.S. sanctions. The sanctions, imposed in 2019, severed Huawei’s access to crucial technologies like semiconductors and 5G chips, severely impacting its global smartphone market position.

American restrictions also led to Huawei’s exclusion from Google’s Android operating system, resulting in a significant decline in its smartphone business outside of China.

In response, Huawei introduced HarmonyOS in 2019 as an alternative to Android and has since been developing updated versions to regain market share in smartphones. The launch of HarmonyOS 4 demonstrates Huawei’s determination to revitalize its smartphone business.

“Huawei’s flagship smartphones are making a comeback,” said Yu Chengdong, CEO of Huawei’s consumer business and intelligent automotive solution business groups, during the Huawei Developer Conference 2023.

In its efforts to regain market share, Huawei has focused primarily on the Chinese market. The company’s market share in China increased to 13% in the second quarter of this year, up from 7.3% in the same period last year. Huawei’s smartphone shipments also grew by 76% year-on-year.

Huawei has refined its strategy to compete in the premium segment of the smartphone market rather than targeting all sectors. “Huawei’s smartphones took the second spot in the high-end segment. So we are making a comeback with vengeance,” said Yu.

In the segment of phones priced above $600 in China, Huawei’s market share increased to 18.4% in the second quarter, compared to 6.7% in the same period last year, according to IDC.

Huawei’s high-end focus aligns with Chinese consumers’ willingness to pay more for smartphones. The company’s Mate X3 foldable device and flagship P60 have contributed to its increased share in the premium segment.

Despite being cut off from critical foreign chips, Huawei plans to re-enter the 5G smartphone market by the end of this year by procuring 5G chips domestically.

“It totally makes sense for Huawei to focus on the premium segment. It’s not only that the high-end segment was more resilient in the gloomy Chinese market, but Huawei could also leverage its premium brand name in China, which other Chinese vendors were still striving for,” said Will Wong, research analyst at IDC.

Huawei’s high-end strategy includes HarmonyOS, an operating system designed for smartphones, wearables, and TVs, with the aim of creating unified software across multiple consumer electronics categories, similar to Apple.

The company stated that HarmonyOS, currently running on over 700 million devices, will offer “an even more intelligent and personalized experience.” Huawei’s AI voice assistant, Celia, has been trained with the Pangu AI model to enhance productivity in both personal and professional life.

At least 200 million mobile phone users interact with Celia every month, according to Huawei.

“You can interact with Celia not just by voice but also through texts, pictures, documents, and more. You can also type to interact with Celia if it’s not the right time to talk. Dialogues between users and Celia can be more natural and intuitive,” said Jia Yongli, director of consumer business at Huawei.

Celia is capable of performing various tasks, including writing summaries, translations, emails, and official documents.

Huawei has also announced that a new set of features will be available to invited users in late August.

However, Huawei’s smartphone recovery is expected to be limited to China, which accounted for 89% of its handset shipments in the second quarter, according to IDC.

This limitation is due to Huawei’s phones lacking 5G capabilities and the absence of key apps, such as Google, that users outside of China are accustomed to.

“It’s not an easy task to regain ground overseas,” said Wong, suggesting that many users have switched to other phone brands due to Huawei’s lack of essential features.

“Even if Huawei could address the key pain points of its products in the overseas market now, it would take time for Huawei to win back those users.”