- Huawei will no longer be able to procure in-house Kirin 9000 chips for its flagship smartphones.
- Here are three ways Huawei could respond to this loss.
Chinese telecom giant Huawei announced that, starting in mid-September, it will no longer be able to procure its Kirin 9000 smartphone processors due to US sanctions that prevent the company from using technology needed for the chip's manufacturing, according to the Associated Press.
The Kirin 9000 chips were used in Huawei's flagship smartphones, such as the forthcoming Huawei Mate 40 series. Due to US sanctions, however, the foundries operated by Samsung and Taiwan Semiconductor Manufacturing Company (TSMC) were only able to accept Huawei's orders until May 15, and can only produce chips until September 15. No foundries besides Samsung and TSMC currently offer the 7nm manufacturing capabilities needed to produce the most advanced smartphone chipsets.
Here are three ways Huawei, the top global smartphone vendor by shipments, could respond to this significant loss:
- Huawei could wait until the China-based Semiconductor Manufacturing International Corp (SMIC) develops 7nm manufacturing capabilities, but that will likely take at least a year. As we wrote last week, China's government is pouring resources into SMIC such that it becomes a domestic replacement for TSMC and Samsung. SMIC raised $6.6 billion in an equity funding round last month to help accelerate these efforts, but it is still two generations behind in terms of manufacturing capabilities. Developing 7nm manufacturing capabilities will likely take SMIC at least 18 months to develop — for context, Intel, which has more advanced chipmaking capabilities than SMIC, recently announced that it likely wouldn't be able to produce 7nm CPUs until late 2022 or early 2023.
- Huawei has increasingly turned to MediaTek to source lower-tiered chips, and it could start using the company's 5G flagship chips. According to industry sources cited by DigiTimes, Huawei's orders from Taiwanese chipmaker MediaTek have increased threefold in response to the US trade ban. Though Huawei has typically used these chips in its lower-tiered smartphones, it could purchase MediaTek's premium Dimensity 1000 Plus chipset, which offers integrated 5G, per Android Authority. The switch would likely cause a performance dip in Huawei's flagship phones, however, since the Kirin 9000 processors were custom-built for Huawei devices.
- Qualcomm is banned from supplying high-end chips to Huawei, but it's lobbying the US government to change that policy. The Wall Street Journal reported that Qualcomm is lobbying the US government to receive an exemption that allow it to supply premium 5G chips to Huawei. Qualcomm is reportedly making the case that the ban works against US interests, since Huawei has still managed to procure chips, just not from US suppliers. Though Huawei would ideally want to revert to its in-house chips, this would prove to be an effective stopgap as the company waits for SMIC to develop its manufacturing capabilities.
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The Link LonkAugust 11, 2020 at 10:23PM
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