Huawei says it has enough chips for equipment businesses but not for its smartphones

25-Sep-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Huawei Technologies, the Chinese tech giant at the epicentre of a US-China tech war, said it has enough chips for its communications equipment businesses but not for its smartphones, and is looking to buy new supplies from US companies provided they can gain the relevant licences from US authorities.

The Shenzhen-based company, which has faced a US trade blacklist and escalating US export restrictions in recent months, said it was still evaluating the impact of US action on its chip supplies after logging the last addition to its inventory in September.

“Our stock of chips for our enterprises business is adequate, but the company is still looking for ways to address the chipset problems for smartphones as Huawei consumes hundreds of millions of smartphone chipsets every year,” said Guo Ping on Wednesday during Huawei Connect 2020, the company’s annual event for the global ICT industry.

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“Qualcomm’s chips will be used on our smartphones if they get a licence from the US government… Qualcomm has always been our local partner, and has supplied us with chips for over a decade,” he added.

Huawei, which recently became the world’s biggest smartphone maker, has been one of the major casualties of rising US-China tensions.

A ban on companies providing Huawei with US-origin technology came into effect on September 15, cutting off key chip suppliers such as Qualcomm and Taiwan Semiconductor Manufacturing Company (TSMC). These suppliers need to apply for a licence from the US Commerce Department, and approval remains uncertain.

Tech analysts are eyeing Huawei Connect 2020, which takes place in the eastern Chinese city of Shanghai, for a clear idea of the company’s future business plans amid the US onslaught.

“The US right now seems to be looking to kill Huawei [to] teach China a lesson,” Stewart Randall, head of electronics and embedded software at Shanghai-based consultancy Intralink, told the Post last month.

“Huawei has very strong capabilities in chipset design and we are willing to help key suppliers to improve their capabilities in manufacturing equipment and materials. To help them is to help us,” said Guo, who underlined that survival is the priority for Huawei after three rounds of US sanctions.

After several statements from Huawei earlier saying it had been been stock-piling supplies of chips, Richard Yu Chengdong, chief executive of Huawei’s consumer business group, acknowledged last month that US sanctions had been a “big loss”, and it may not be able to ship handsets with its high-end Kirin chips after this year as a result.

“Given that the US intends to restrict Huawei’s development in high-end areas such as 5G… the probability of the US lifting its ban on smartphone chips for Huawei in the short term is scant,” said Arisa Liu, a chip industry analyst with the Taiwan Institute of Economic Research.

The US-China tech war has seen Huawei and leading Chinese AI companies such as Megvii and SenseTime added to the US trade blacklist, with Chinese apps such as TikTok and WeChat, threatened with bans for alleged national security risks.

All of the Chinese companies have denied these allegations and Huawei founder Ren Zhengfei has accused the US of trying to choke off his company as a global tech champion.

Earlier this month, Huawei said it was preparing to switch all its handsets from Google’s widely-used Android operating system to its own Harmony OS, as it seeks to keep its smartphones competitive amid the US ban.

Smartphones come under Huawei’s consumer business group, the company’s biggest operating segment, which generated $36.5 billion in revenue in the first six months. Huawei overtook Samsung Electronics in the second quarter to become the world’s top smartphone vendor.

Meanwhile, Huawei’s Australian operation said this week it would continue to cut staff numbers and investment in the country amid strained relations between Beijing and Canberra, according to media reports.

In 2018, Australia banned Huawei from supplying equipment for its 5G mobile network citing national security risks, a move Huawei criticised as being politically motivated. Huawei has said Australia is a relatively small market amid its global operations.


Category: China

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