Huawei shipped 54.2 million units to secure a record high market share of 15.8%, the companies said. Apple meanwhile fell out of the top two rankings for the first time since the second quarter of 2010, despite iPhone shipments increasing 0.7% to 41.3 million.
Canalys attributed Huawei's strong performance in part due to strong sales of its latest flagship the P20, and the success of its Honor sub brand. Strategy Analytics said the company's mid-range Android models are also proving wildly popular across both Asia and Europe.
Strategy Analytics added that Apple is under pressure to innovate new iPhone designs if it wants to grow future sales volumes.
The companies noted that market leader Samsung's quarterly shipments fell 10.4% year on year to 71.5 million units.
Meanwhile IDC's latest Worldwide Quarterly Smartphone Tracker estimates that smartphone vendors shipped 342 million units during the quarter, which represents a 1.8% year-on-year decline. Strategy Analytics by comparison estimates that global shipments fell 3% to 350 million units.