Huawei to Halt Smartphone Chipset Production

Posted on August 9, 2020 by Paul Thurrott in Android, Mobile with 8 Comments

Thanks to withering U.S. sanctions, smartphone giant Huawei this week said that it will have to halt production of its own chipsets, which rely on partnerships with U.S.-based businesses.

“After September 15, we will neither be able to produce our flagship chipsets nor our chips with AI processing capabilities,” Huawei CFO Yu Chengdong said at a technology innovation event in Shenzhen Friday, as reported by Caixin Global, a Chinese media publication. “This is a huge loss to us.”

Like Samsung, Huawei, the world’s second-biggest maker of smartphones, designs its own smartphone chipsets, and it uses Taiwan Semiconductor, the world’s largest chipset fabricator, to manufacture them. But Taiwan Semiconductor stopped taking new orders from Huawei in May after a new round of U.S. sanctions cut off its remaining access to partners and their intellectual property.

Yu told the conference that Huawei will sell fewer smartphones this year than it did in 2019, when it hit a new record of 240 million units sold. And its smartphone operations have continued to do well this year, despite the U.S. sanctions and no official access to the U.S. market; the firm sold 105 million smartphones in the first half of 2020 and 55.8 million handsets overall in the second quarter. But 70 percent of those quarterly sales occurred solely within China.

And with supplies and access to U.S. technology getting cut off, Huawei is now facing supply chain problems that could hamper the availability of planned future phone models, no matter which market they target.

As a result of the unilateral U.S. action, Yu is calling on China to step up its chip design and manufacturing capabilities, and to solve the U.S. problem by “making breakthroughs in technology innovations on operation systems, chips, data and cloud services.” This, of course, is the nightmare scenario that many have concluded would be the real endgame triggered by the U.S. sanctions, that Huawei and other Chinese firms will simply stop relying on today’s tech giants, thus diminishing the power and influence of these U.S.-based companies.

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Comments (8)

8 responses to “Huawei to Halt Smartphone Chipset Production”

  1. Paul Thurrott

    We had a self-inflicted site glitch this afternoon that deleted all four of my posts today, including any comments you may have made. I've republished the posts, but there's no way to get the comments back, sorry. --Paul

  2. geoff

    I realize that the USA dislikes China, for a range of reasons. That's a discussion for some other forum.

    And of course, there's a major trade war going on right now. So some collateral damage is inevitable.

    I realize that, hypothetically, there is at least the potential for China to *perhaps* attempt to disable or disrupt future 5G networks in the USA if Huawei technology is used to build those networks. Perhaps banning Huawei networking equipment makes some sense, perhaps not.

    But why stop Huawei from using (American) ARM chips in smartphones running (American) Android? That makes absolutely no sense. The smartphone is not the network. A kill switch in some handsets isn't going to bring down the network.

    All this does is force alternative suppliers to emerge. Those new suppliers will necessarily be beyond the reach of the USA and it's arbitrary political interference.

    Who wins from forcing that to happen? And who loses?

    China wins, and the USA loses.

    So why do it?

    • shogun06

      Actually, there are other winners in this scenario, namely the Russian Federation. Every foreign policy decision since Trump took office has directly or indirectly benefited his Russian benefactors, and the "trade war" with China is no different. We have a Russian mole in the White House, and the Republicans, who are supposed to actually care about National Security, do nothing because all our representatives really care about is reelection.

    • Username

      In reply to Geoff: All this does is force alternative suppliers to emerge. 

      this would happen anyway. Reverse-engineering is just a matter of time and perseverance. I worked for a telco giant whose engineers were consistently frustrated by Huawei and ZTE IP theft. Eventually, Huawei won.

      • Vladimir Carli

        In reply to Username:

        I wonder about the IP theft. As a matter of fact no one is able today to make better phones than Huawei. They are almost impossible to buy in the Western world due to the absence of google apps (thank you US government) but they are by far the best on almost every spec. Better than any google, apple, samsung phone. If they have been stealing, for sure they managed to improve the stolen products significantly beyond the original

  3. bluvg

    The chip manufacturers have reported major IP leaks recently. Wonder where that data is going.

    This is the USA engineering its own demise out of its own stupidity.