First time in six years, Huawei (including Honor) fell outside the global top five smartphone vendors, garnering the sixth place in Q4 2020 with 32 million smartphones shipped, according to a new report.

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Huawei dramatically receded in most markets as the result of the US sanctions.

"Its decision to divest Honor, however, may prove vital, as Honor is not bound by the same restrictions and component supply is resuming," said research analyst Amber Liu from market research firm Canalys.

It was just nearly a year ago that the same research firm reported that Huawei had overtaken Apple to take second place in 2019.

Honor, however, has a colossal challenge ahead.

"It needs to redefine the brand, from young demographics to address both premium and mass market. It needs to extend its product range to compare to the breadth of Huawei." Liu added.

Most importantly, it needs to re-enter channels which are already signing multi-year ranging deals with competitors.

"For example, in critical channels like European network operators, the vendor onboarding process can take more than six months. For this reason, Honor is not expected to take substantial market share back in the near-term," Liu noted in a statement late on Thursday.

In Q4 2020, worldwide smartphone shipments reached 359.6 million units, a small decline of 2 per cent year-on-year.

Apple shipped its most iPhones ever in a single quarter, at 81.8 million units, up 4 per cent against the previous year.

Samsung took second place, shipping 62 million units and Xiaomi, Oppo and Vivo completed the top five.

"The second wave of Covid-19 has taken a huge toll, but unlike the first wave, the industry was braced for impact," said Canalys senior analyst Ben Stanton.

"Overall though, sentiment in the industry is positive, and 2021 will see the smartphone market rebound after a 7 per cent decline in 2020," he added.