The USA has tightened sanctions against Huawei. The Kirin chip could be on the brink of extinction unless Huawei finds a new chip manufacturer. Unexpected help comes from Qualcomm.
The US government has tightened the screws. Under US President Donald Trump, the government has now decreed that no manufacturer may trade with Huawei anywhere in the world if US equipment or US software is used in production.
Huawei's days as a manufacturer of 5G network equipment and smartphones will probably be over as soon as the company runs out of stock next spring.
Dan Wang, Researcher, Gavekal, August 2020
"We believe this is a move that significantly (almost completely) limits Huawei's ability to source semiconductors from anywhere," writes Manish Nigam, Head of Asian Technology Research at Credit Suisse.
The end of smartphones (and 5G equipment)?
Even more harshly put Dan Wang, researcher at Gavekal: "Huawei's days as a manufacturer of 5G network equipment and smartphones are probably over as soon as the company runs out of stock next spring".
We're in a tough spot... Huawei's smartphones have run out of chip supply. This year could be the last year of Kirin chips... This is a big loss for us.
Richard Yu, Chief Executive der Consumer Business Group, Huawei, August 2020
And now... what next?
And then, after that, we do another four years because they spied on my campaign. We should be allowed to repeat those four years.
Donald Trump, Präsident der Vereinigten Staaten von Amerika, August 2020
The situation remains the same for smartphones: New devices are delivered without Google Services, but run on Android. Old devices with Google Services will continue to receive updates. Google Services will not disappear from devices overnight.
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The Trump administration has not yet substantiated suspicions of espionage. Huawei is said to be able to use its 5G network infrastructure to intercept data and information that could harm the USA's national security. The evidence is still pending, but it is possible that the USA has not yet made it public. Sami Seppänen, CEO of the Estonian telecoms group Elisa, tells err.ee that there are no backdoors in any products from Huawei or other Chinese manufacturers. He even goes so far as to say that any "engineer familiar with the matter" would laugh at the suggestion. "The accusations of espionage come from the mouths of the clueless," he says. The smartphones that the public are more interested in are more or less collateral damage in this battle.
For the first time, Richard Yu, Chief Executive of Huawei's Consumer Business Group, has also criticised the situation. At the China Info 100 conference, he publicly stated that Huawei's chip suppliers have only accepted orders up to and including 15 May 2020. "We are in a difficult situation... Huawei's smartphones have run out of chip supply. This year could be the last year of Kirin chips... This is a big loss for us," he says.
Huawei is not giving up. A company the size of Huawei cannot afford this. The company must therefore find a solution in the short term. The end of the Kirin seems to have been decided, at least temporarily. The Kirin chip is the intellectual property of Huawei, but is manufactured by HiSilicon. HiSilicon uses US technology in manufacturing and is therefore no longer authorised to produce for Huawei.
Huawei must therefore find a new manufacturer. An obvious candidate would be MediaTek, a Chinese chip manufacturer known for its low-end chips. The question, apart from that of US equipment, with MediaTek, however, is whether it has the ability to produce 5 nm chips. Because that is where the future lies. MediaTek has the infrastructure for 7nm chips, as the press releases for the new MediaTek Dimensity 800U reveal. However, the future lies in the 5nm architecture and Huawei is probably closer than any other manufacturer to the step to the two nanometre smaller architecture. Although Huawei is not very forthcoming when it comes to development, the company's history shows that it is quicker to adopt new architectures than the competition. But: Can MediaTek produce the amount of chips that Huawei needs?
Unexpected help comes from the camp of chip maker Qualcomm, American manufacturer of the Snapdragon systems-on-a-chip. The Wall Street Journal reports that Qualcomm is lobbying to be allowed to do business with Huawei again. One of Qualcomm's main arguments is that the trade ban will not prevent Huawei from procuring the materials it needs to manufacture phones and 5G network equipment. Rather, the USA will lose "billions of dollars" as a result of the trade ban.
Donald Trump, President of the USA
Meanwhile, the US President, initiator of the sanctions against Huawei, is fighting for his re-election. Regardless of the espionage allegations against Huawei, at an election event in the US state of Wisconsin he accused the FBI of spying on him during his election campaign in 2016. He said he was therefore entitled to a third term: "We're going to win another four years. And then, after that, we'll do another four years because they spied on my campaign. We should be allowed to repeat these four years."
