China's Huawei Technologies, the world’s biggest solar inverter manufacturer, ended its U.S. inverter sales last week, according to an equity research note from Roth Capital Partners published Monday.

The investment banking firm told Greentech Media that it has learned Huawei is moving to lay off or transfer some of its U.S. workforce, while maintaining some technical support and warranty staff. A Huawei spokesperson confirmed to Greentech Media that it's eliminating "several positions" in the U.S. and reassigning non-U.S. citizen staff to other regions. The company attributed the changes to an "unwelcoming climate being fostered in the United States."

The spokesperson did not comment specifically on the end of U.S. inverter sales. Another spokesperson told GTM that Huawei had not shut down a division, but also declined to comment on the status of U.S. inverter sales.* As of Monday afternoon, the company was still answering pre-sale consultation phone inquiries for the U.S. market. Roth senior analyst Philip Shen said the sales shutdown had been confirmed by three sources, including two Huawei customers.

U.S. authorities have toyed with an outright ban on Huawei’s inverters for months, amid allegations of intellectual property theft and increasing concerns that the company has ties to Chinese intelligence services. Huawei is the world's largest producer of telecommunications equipment, with the solar market just one part of its sweeping business operations.

In February, 11 U.S. senators asked Energy Secretary Rick Perry and Homeland Security Secretary Kirstjen Nielsen (who stepped down from that post in April) to ban Huawei inverters because they felt they presented a “national security threat.” The federal government has already placed some restrictions on Huawei products.

Lindsay Cherry, a solar analyst at Wood Mackenzie Power & Renewables, said even the potential for a U.S. ban had already cast a long shadow on Huawei’s prominence in the market by creating fear about purchasing its product and reducing bankability of the company’s inverters.

“Since the proposed ban in late February, I think this has been the writing on the wall,” said Cherry. “It was probably inevitable that they would cease operations in the U.S.”

Preliminary figures from Wood Mackenzie Power & Renewables put Huawei’s global market share at 22 percent in 2018, the highest of any company, down from 25 percent in 2017.

The company’s U.S. footprint is smaller, at around 4 percent of the market in 2018. For three-phase inverters, those used in utility-scale and commercial and industrial installations, Huawei claimed 16 percent share in the U.S., third after Chint Power Systems and SMA.

Though political factors have had the most significant impact on Huawei’s U.S. share, inverter companies are also coping with tariffs and uncertainty brought by yo-yoing trade discussions between China and the U.S.

Huawei had intended to expand its single-phase, residential inverter to the U.S. market, but those plans got tangled up in the diplomatic standoff.

Enphase and SolarEdge, two rival suppliers of inverters for the U.S. residential market, are most likely to see a positive impact from a Huawei pullback, analysts at Roth and WoodMac said. “SolarEdge occupies such a large portion of the single-phase market,” said WoodMac's Cherry. “Huawei would have been offering a similar solution.”

Roth's Shen has recommended buying shares of Enphase and SolarEdge.

How the shutdown in the U.S. may impact Huawei’s international standing remains to be seen. “It’s game over in the U.S. for now,” said Shen. “As it relates to international demand, it’s tough to say.”

*This story has been updated with comments from Huawei on June 25 and July 2.

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A recent report that captures changing relative market shares for the top global PV inverter manufacturers.