Huawei Targets U.S. Smartphone Market
Company Plans to Pursue High-End Users

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By SVEN GRUNDBERG
Updated Feb. 26, 2014 4:08 p.m. ET

BARCELONA—Locked out of the lucrative U.S. telecoms-network market, Huawei Technologies Co. now has its eyes trained on America's smartphone sector.

Huawei Chief Executive Eric Xu told reporters at the Mobile World Congress here Wednesday that the Chinese company's focus will shift to the U.S. this year—after not releasing new devices there last year—complementing its push in Europe and Asia.

"We're going to make a change this year, and we're going to continue to launch smartphones for the U.S. market," said Mr. Xu, one of three senior executives who rotate through the CEO job. Mr. Xu is set to hand the baton to Guo Ping by the end of next month, under the company's six-month rotating CEO system.

Mr. Xu said the company won't try to challenge the positions of Apple Inc. AAPL -0.90% and Samsung Electronics Co. 005930.SE -0.75% in the U.S. Rather, the company sees itself competing with the large number of manufacturers fighting for market share under those two giants, he said.

This week, Huawei took the wraps off several new, high-end smartphones and tablets. One was the seven-inch MediaPad X1—a razor-thin €300 ($412) tablet, powered by Google Inc. GOOG +0.01% 's Android operating system, that its executives repeatedly compared with Apple's high-end iPad Mini.

Huawei's push into the largely high-end U.S. market comes as several device makers, including Nokia Corp. NOK1V.HE +0.18% Nokia Corp. Finland: Helsinki €5.62 +0.01 +0.18% Feb. 26, 2014 6:30 pm Volume : 11.60M P/E Ratio N/A Market Cap €20.99 Billion Dividend Yield N/A Rev. per Employee €129,952 5.705.605.50
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02/26/14 Smartphone Makers Aim at Emerg... 02/25/14 HEARD ON THE STREET: For Smart... 02/24/14 Nokia Unveils Its First Androi... More quote details and news » and BlackBerry Inc., BB.T -2.13% are turning their eyes to faster-growing, entry-level smartphone markets in such places as India and Africa. While Huawei will continue to sell ultracheap Android smartphones in these markets, Mr. Xu said the cheap phones aren't its main focus.

"We're not interested in the low end of the market. Only by pursuing high end can we pursue our growth," he said.

Consumer devices account for an increasing portion of the Chinese company's revenue. Last year, they accounted for 23%, or about $9.1 billion, of its overall revenue, the company said. This year, it aims to increase smartphone sales to between 80 million and 100 million devices, up from 50 million last year.

Huawei's offerings of tablets and smartphones largely run Android's operating system. The company has also joined with Microsoft Corp. MSFT -0.19% to make Windows Phone-powered devices. Sales of these haven't been satisfactory, Mr. Xu said.

Currently, Huawei's smartphone sales largely come from countries in Asia. China alone accounts for 40% of the company's smartphone sales, while other major markets include the Middle East and Africa, Latin America and Europe.

In a bid to improve awareness in the U.S., Huawei last year signed several sponsorship deals with the likes of U.S. pop stars the Jonas Brothers.

The company has also recruited several foreign executives to help it transition from a low-cost maker of telecom equipment to a global maker of its own-brand products. Those hires include Colin Giles, a former Nokia veteran who now runs the company's consumer group.

"For sure we need to build the brand; we accept that," Mr. Giles said in an interview. "Also we need to improve distribution and get good at retail."

That is all the more challenging in the U.S., where lawmakers have effectively shut Huawei out of the wireless-equipment market. A congressional report in 2012 concluded that Huawei posed risks to national security, alleging that the companies' equipment could become a vehicle for Chinese spying. The company has called the report misleading.

Corrections & Amplifications

Huawei Chief Executive Eric Xu is set to hand the baton to Guo Ping by the end of next month, under the company's six-month rotating CEO system. An earlier version of this article misspelled Mr. Guo's name.

—Sam Schechner contributed to this article.