Huawei Set to Beat Apple With World’s Top Chip Despite US Ban

Sanctions-hit Huawei to premier smarthpone chips based on a new technology a year ahead of US and Korean competitors

Huawei Technologies is set to leapfrog Samsung Electronics, Apple and Qualcomm with the introduction of two of the world’s most advanced chips in the coming months, despite the U.S. crackdown on exports to China’s flagship tech company, sources familiar with the matter told the Nikkei Asian Review.

The move to introduce an advanced mobile chip and a processor chipset with built-in 5G modem comes as many observers doubt China’s ability to close the gap with the U.S. on high tech semiconductors.

But Huawei is set to launch its chip offerings months ahead of rivals, in defiance of the trade war which has cut the company off from vital pipelines of parts and software. It is also preparing to launch its flagship high-end Mate 30 smartphone in the autumn as planned, sources said, although questions remain over its prospects as long as access to Google’s Android operating system remains in doubt as a result of the U.S. constraints.

Huawei has aggressively stockpiled components and certified alternative non-U. S. suppliers following last year’s arrest of Chief Financial Officer Meng Wanzhou, which has helped it to stick to its launch schedules.

As a result of its greater self-reliance, Huawei’s longer-term supply chain will be permanently altered, sources familiar with the company’s strategy said. The moves will have consequences for many of the biggest names in the U.S. semiconductor industry, including Micron Technology, Qualcomm, Broadcom and Texas Instruments, which count the Chinese company as a major customer.

“You will still see a lot of U.S. components in its new products in the second half of this year,” one of the sources said. “But in the next one to three years, Huawei’s priority will be to figure out detailed backup plans and imagine a world without American suppliers.”

U.S. suppliers have made their concerns known to President Donald Trump, who appears to be softening his stance on Huawei as Washington negotiators head to Shanghai next week for a renewed attempt to resolve the protracted trade war between the two countries.

President Trump on Monday met with executives from seven tech companies including Google, Intel, Micron and Qualcomm, and he agreed to their request for timely decisions on license applications to supply Huawei.

U.S. Commerce Secretary Wilbur Ross told Bloomberg Television on Tuesday that the Trump administration will issue decisions on about 50 waiver applications from 35 companies within the next few weeks.

Even so, Huawei will not reverse its efforts to reduce dependence on American suppliers, sources told the Nikkei Asian Review.

The two new, in-house chips mark a significant milestone in this effort for the company. The mobile processor, dubbed Kirin 985, is designed by Huawei’s chip arm, HiSilicon Technologies. It will be the world’s first chip using the cutting-edge extreme ultraviolet, or EUV, technology and is produced by Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chipmaker.

Apple and Samsung are not adopting EUV technology for mobile processors until next year, sources said.

Shipment of these high-end chips began in the April-June quarter, sources confirmed to the Nikkei Asian Review. This will allow Huawei to debut its premium smartphone Mate 30 series, designed to compete with new iPhones this fall. These are the most advanced mobile processors in the industry, generating more powerful computing performance but consuming less energy.

Huawei is also working on a new mobile chipset with the 5G modem integrated into a system-on-chip, that is scheduled for release from the October-December period this year, two people told the Nikkei Asian Review. That would beat the plan from the world’s top mobile chip developer, Qualcomm, to fully commercialize its integrated 5G platform in the first half of 2020.

Huawei is planning to introduce the 5G edition of Mate 30 in the second half of this year and set an aggressive internal goal of selling 10 million 5G smartphones by the end of 2019, one of the sources said.

Huawei on Friday said it would also release a 5G edition handset of the Mate 20 series, which was first launched last year. The company claims it will be China’s first working 5G smartphone.

Huawei founder Ren Zhengfei told Yahoo Finance on Monday that his company plans to ship 270 million handsets this year, an ambitious goal of 30% growth. Ren’s bullish comments stand in contrast to his previous statements that Washington’s crackdown had hurt the tech group’s smartphone sales overseas.

But Huawei appears to be making progress on replacing U.S.-based suppliers with Asian alternatives. It has already shifted orders of cellular power amplifiers and Wi-Fi chips once bought from Skyworks, Qorvo and Broadcom to Japan’s Murata Manufacturing and Taiwan’s RichWave, one of the sources said.

The Chinese company also began putting its own design of these power amplifier and radio frequency components into production this year with Taiwan’s WIN Semiconductors, three sources said.

“The performance is not as good and the cost of Huawei’s own design is definitely more expensive, but the company is doing it anyway and it will replace some low-end ones first,” one of the sources said.

Remus Hsu, a tech analyst at Taipei-based Market Intelligence & Consulting Institute, said Huawei’s goal to ship 270 million handsets this year was optimistic, even as the company’s shift toward self-made components and non-U. S. suppliers starts to bear fruit.

“Huawei is making a lot of effort to reduce its reliance on the American suppliers,” said Hsu, who has watched the company for a long time. “But the sales performance of its smartphones in the second half of this year will depend on if it can get the support from worldwide telecom operators.”

The critical issue is whether Huawei will have access to Google’s Android operating system and whether apps run smoothly, the analyst said.

Though Huawei seems capable of keeping its hard-earned No. 2 spot in the smartphone industry this year, the U.S. blacklisting has inflicted some pain and generated uncertainty over the future. Finding alternatives for American component suppliers of advanced software such as the Android mobile operating system and chip design tool providers will not be easy.

Huawei previously said it had delayed the introduction of its new notebook with no further updates, but its sub-brand Honor on Tuesday unveiled a new notebook feature with Intel and Nvidia chips that will be available in August. The Chinese company also postponed the June launch of the foldable Huawei Mate X to September but said the decision was unrelated to the new U.S. rule.

Huawei declined to comment on the launch of chips or new handsets, or whether it is increasing orders with Taiwanese and Japanese suppliers. Taiwan’s Win Semiconductors also refused to comment. RichWave said it could not confirm Huawei orders. U.S. suppliers of Qualcomm, Skyworks, Broadcom, Qorvo, Lumentum, and Murata of Japan had not responded to Nikkei Asian Review’s request for comment by the time of publication.

Source: Nikkei

  1. CH Tan says

    Trump is antagonising the world, allies and competitors. They are rapidly catching up in technology at lower cost. Eventually, USA can only sell agricultural products to the world.

  2. JustPassingThrough says

    lmao, the u.s. is playing out of its league and not only on this front.

  3. BillA says

    May take a while, but sales to China should not be in any US companies’ forecast

  4. Alternate History says

    The US continues to foolishly shoot itself in the foot by bullying . The victims of US bullying are becoming independent and no longer in need of what the US wanted them to buy or do. . Laughable.

    1. Ray Douglas says

      Correction for you sir, the US continues to shoot itself in both feet. Long may it continue. The end in nigh. Hurray, hurray hurray.

    2. Mary E says

      It truly is!

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