Huawei founder Ren Zhengfei had said in an internal briefing that the company should develop its own operating system and chips to counter challenges from external providers.

However, industry insiders said that an app ecosystem is much more important than developing an operating system, as can be seen from the failure of Blackberry and Microsoft's self-developed mobile operating systems.

"It won't be a problem to create an ecosystem in the domestic market as Chinese consumers currently do not use the same apps as foreigners do. Also, Huawei can get help from Chinese tech leader Tencent which owns a huge app ecosystem," said an IT expert familiar with the matter who did not want to be named.

He said that there are negative impacts for Huawei in foreign markets in the long term but that does not mean there are no options. "In the worst-case scenario, it can still offer a bare smartphone overseas and cooperate with local third-party firms for the operating system," he said.