The US trade department runs after Huawei again. This month, the company closed a year on the list of US companies and the government decided to expand the restrictions on the Chinse market. Now, the U.S. government is preparing to give Huawei a big blow by preventing the smartphone maker from getting chips from foundries like TSMC. The company is the main supplier of Huawei's HiSilicon Kirin chipsets. A new export rule specifies that all foundry shipping chips made with U.S. technology require a license before components are shipped to Huawei. The U.S. government gives Huawei a window in which the company can take possession of chips from wafers that are currently in production, as long as they are delivered before September 14th. As a result, Huawei can secure enough 5nm Kirin 1020 SoCs for the Huawei Mate 40 series.
According to an analyst, Huawei could use Snapdragon chips for 2021 flagships. Seriously?
Now we have a really strange claim, but that might make sense to you in the end. While Huawei will be able to secure enough chips for its H2 2020 flagship, what will happen in 2021? Of course, the company is already moving part of its chip business to the SMIC of its new partner China. However, SMIC is not as advanced as TSMC. Currently, the breakthrough chip that the company camera produces uses 14nm mode. Flagships are currently far beyond, as already mentioned, the Huawei Mate 40 series will come onto the market with a state-of-the-art 5nm chipset.
We can agree that Huawei SMIC can help improve its production capabilities. The company recently announced its first SMIC chip, the Kirin 710A. SMIC is now shifting its focus to building a solid production of 7nm and 8nm chipsets, but is suffering from the lack of advanced lithography equipment. The company still needs a lot of time and better lithography equipment to dream with the 5 nm nodes. In other words, this is something that will not be finished by 2021. We don't know how many units of the Kirin 1020 Huawei can be backed up for the Mate 40, but that will be enough for the upcoming Huawei P50 series.
SMIC will not be in the league for 2021. What is the next step?
On this basis, KeyBanc Capital Markets analyst John Vinh made one of the most controversial statements about the future of Huawei phones. According to him, Qualcomm will deliver its Snapdragon chipsets for the Huawei P50 and Mate 50 series next year. Of course, the U.S.-based chipmaker must apply for a license with the Department of Commerce's Office of Industry and Security. The analyst states that such an application would be granted. Qualcomm would also conclude a patent license agreement with Huawei. The San Diego-based company has been trying to sell Huawei its 5G modem chips for some time. The problem is, will the US government allow that to happen?
According to the analyst “Many of the restrictions imposed on Huawei serve to protect national security threats from 5G communications / network infrastructure and military applications. We don't believe that smartphone devices are targeted at consumers. “ He concludes by saying that the deal would surely benefit the country. However, if the US gets in the way, Qualcomm will still win in this situation. After all, other companies like Xiaomi, Oppo and Vivo are strong customers. You will invest even more in Snapdragon chips to secure Huawei's market share. The analyst states that Qualcomm will be a surprising winner of the latest rules imposed by the Department of Commerce.
It makes sense, but the chances are very slim.
The report seems reasonable, but ultimately we don't think the US government will allow it. Especially when you consider that the US-China trade war is getting worse every day. Huawei is also currently dealing with MediaTek, at least for the middle class. However, if Qualcomm is seen as a possible supplier, we see no reason to consider the Taiwanese company as well.
The Chinese giant was able to deliver over 240 million smartphones last year. This was an increase compared to the 2018 results. The company is one of the few smartphone manufacturers in China to stay healthy during the COVID 19 pandemic. We still have to see how this year will affect corporate sales in the coming months.