The Trump administration’s sanctions hit Huawei hard, and the Chinese tech giant now says it will end up with processor chips for its smartphones until September without access to US vendors, according to a weekend Associated Press report.
Huawei, one of the leading telecommunications providers in the world, has been blacklisted ever since May 2019 from sourcing components for their devices from U.S. companies under an executive order from President Donald Trump. In a sharp escalation of the ongoing tech feud between the US and China, the ban targeted several foreign companies who could pose intelligence officials’ arguments as a threat to national security. In recent months, the White House has continued refurbished restrictions and the Federal Communications Commission appointing Huawei a national security risk, and the fallout has scared Huawei.
While Huawei’s own engineers design one of its most advanced processors, the Kirin chip, production is handled by contractors who rely on American manufacturing technology, said Richard Yu, chairman of the company’s consumer unit. the China Info 100 Industry Conference on Friday per AP. Without access to those suppliers, production will end on September 15 in what Yu called “a huge loss for us”.
“Unfortunately, in the second round of US sanctions, our chip manufacturers only accepted orders until May 15,” Yu said. “Production will close on September 15. This year, the latest generation of Huawei Kirin could be high-end chips.”
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As a result, he added, the company has “no chips and no supply” for its smartphones, which recently surpassed competitor Samsung as the world’s top-selling brand for the first time with 55.8 million devices sold in Q2, according to the tech research fast Canalys. Yu attributed the success in the first half of 2020 to increased demand in China and strong sales of high-end products, but predicted Huawei’s total smartphone sales this year would fall below 2019’s total of 240 million devices sold.
However, a life saver can be incoming. According to of the Wall Street Journal, the US chip company Qualcomm is lobbying US policymakers to reduce sanctions and allow chips to be sold to Huawei for the production of their 5G phones. The company claims that the export ban does not hurt Huawei: by cutting off Qualcomm from potential sales of essential components in Huawei’s device, the ban essentially gives the market – worth up to $ 8 billion annually – to foreign competitors such as Samsung and MediaTek of Taiwan.
“If Qualcomm is subject to licensing but its foreign competitors are not, US government policy will cause a rapid shift in 5G chipset market share in China and beyond,” the company said in a presentation to federal officials checked by the Journal. That would not only heat up American technical research, but possibly threaten the country’s global leadership in 5G, which would be “an unacceptable outcome for American interest.”
The Department of Commerce may issue licenses to individual companies to embrace the ban and sell to Huawei, which Qualcomm claims would generate billions of dollars in revenue for the company to put into its own development and create new technologies. Other U.S. chipmakers have applied for similar licenses, including Intel, Micron Technology, and Xilinx, the Journal reported.
And it’s understandable American companies would fight to get a piece of that pie. Even blacklisted by the US and ravaged by the pandemic with coronavirus, Huawei announced it it had generated $ 64.8 billion in revenue in the first half of 2020 – not quite the same growth it saw in previous years, but still nothing to sneeze at.
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