Rechercher dans ce blog

Saturday, September 19, 2020

Huawei enters a new world: How the US ban will affect global tech - Nikkei Asian Review

huawei.indah.link

TAIPEI -- In less than 24 hours' time the world for Huawei Technologies will change -- and its rise as the world's biggest smartphone and telecom equipment maker over the past decade risks coming to a juddering halt.

After midnight on Sept. 14, all its non-American suppliers across the world will have to stop shipping to Huawei if their products contain U.S. technology. Those suppliers will need a license from the U.S. Commerce Department if they want to maintain business with the Chinese tech champion, according to the department's export controls imposed on Aug. 17.

In danger are components vital to Huawei's operations: from key semiconductors to displays to camera lenses, and even printed circuit boards. Huawei has been stockpiling all kinds of chip inventories since the end of 2018, but it is unknown whether they are well stocked with electronics components such as advanced displays and camera lenses. "Electronic devices are very complicated," said Wu Chia-chau, chairman of Nanya Technology. "Without any one of the components, you could not assemble complete devices -- smartphones, laptops, or base stations."

Su Tze-yun, director of Taiwan's Institute for National Defense and Security Research and a supply chain expert, said Huawei might find some low-end alternative components. "But that could make Huawei's products much less competitive and even back to where they were 10 years ago," he said.

Internally, China's biggest tech company -- with more than 190,000 staff and revenues of more than 850 billion yuan ($124 billion) -- risks a talent exodus. It has already lost hundreds of employees to rivals. "Huawei's chip development team, who used to work around the clock, can now suddenly work at an easier pace," a chip industry executive said. "Many employees are waiting for their next major assignments from the company but see a lot of uncertainties ahead."

Huawei's fate is also a big moment for the wider industry.

Suppliers must adjust to the potential loss of a big client. Rival sellers of consumer electronics and telecom equipment -- including Apple, Samsung Electronics, Xiaomi, Oppo, Vivo, Ericsson and Nokia -- are ready to grab market share. Meanwhile companies buying 5G equipment from Huawei have also had to seek alternatives -- in what amounts to huge shake-up of the tech supply chain.

How and why is the U.S. cracking down on Huawei?

Huawei's rapid rise and links to the Chinese state have long been a cause for U.S. concern. But tension has escalated significantly under President Donald Trump, particularly since Huawei CFO Meng Wanzhou, daughter of founder Ren Zhengfei, was arrested in Canada after a U.S. request, accused of violations of American sanctions on Iran at the end of 2018.

Last May, the U.S. placed Huawei on a trade blacklist -- the so-called Entity List -- to limit its uses of American technologies, requiring its U.S. suppliers to obtain government approval to ship to Huawei.

This May Washington tightened the screws further. It restricted even non-U.S. manufacturers -- such as Taiwan Semiconductor Manufacturing Co., the world's largest contact chipmaker -- from building any products for Huawei and its chip designing arm HiSilicon if they used American equipment.

And last month the U.S. launched the third wave of crackdown on Huawei, forbidding all suppliers that use American technologies from selling to Huawei without a license.

Have any companies applied for licenses, and are they likely to get them?

It is still unclear -- although some companies have said they would like licences.

There is precedent. After Huawei's addition to the Entity List, most American chipmakers did suspend shipments -- but several, including Qualcomm and Intel, announced a resumption after receiving licenses from the U.S. government for some products.

As things stand, Taiwan's MediaTek, the world's second-largest mobile chip developer after Qualcomm, has confirmed to Nikkei that it has applied for the licences to resume some business with Huawei. Samsung Electronics, Samsung Display and SK Hynix have also reportedly applied for licenses. TSMC, on the other hand, has not said whether it will seek approval.

Lawyers said that because the U.S. has further amended its export control rule, companies with licenses to ship to Huawei will need to renew the approval. "Even if a company has a license to enable it to engage in activity covered by the May 2020 rule, it will need to obtain a different license or a modified license if it proposes to engage in activity that is covered by one of these new rules," said Harry Clark, partner of  U.S. law firm Orrick.

How will Huawei's phones be affected?

In its smartphone business, Huawei has so far shown resilience against the U.S. clampdown. In the April-June period, Huawei even overtook Samsung to become the world's biggest seller of smartphones. But problems are piling up.

Its Kirin series of chips, which power its flagship smartphones and have come to symbolize its capacity for innovation, are likely to be wiped out by the U.S. ban. Huawei also said this week that it would start to use its own HarmonyOS 2.0 on its smartphones from next year, suggesting that Huawei no longer expects to resume its collaboration with Google, and acknowledged that the shortage of chip supplies would affect its smartphone sales.

Huawei has already suffered in the European market, where its sales dropped 16% in the April-June period, while Samsung and Xiaomi enjoyed 20% and 48% year-on-year growth, respectively, according to research company Canalays. "Samsung has been quick to capitalize on Huawei's U.S. Entity List problems, working behind the scenes to position itself as a stable alternative in conversations with important retailers and operators," a Canalays analyst said in a research note.

Donnie Teng, an analyst with Nomura Securities, said Huawei's mobile business faces huge uncertainties.

"For its upcoming flagship smartphone -- known as Mate 40, its most important model to take on iPhones every year -- Huawei has become very conservative on the outlook," Teng said. "We expect Huawei to start losing shares even in China ... after Sept. 15," he added.

Huawei's smartphone shipments could even plunge to only 50 million units next year, from 195 million units this year and 240 million units for 2019, said Jeff Pu, an analyst with GF Securities, if the U.S. did not ease the restriction.

What about the rest of its business?

Huawei's telecom gear business has been a pillar of its operations for decades, and it plays a crucial role in helping China's major carriers to build 5G infrastructure. Huawei has prepared ahead for at least one year of inventories. The pace of 5G installation in China, however, has slowed as Huawei rushes to redesign and remove as much as American content from its products as possible.

Outside China many countries, such as the U.K., have decided to limit the use of Huawei equipment.

"Huawei is by far the world's largest telecom network equipment vendor and therefore the largest customer of any of its suppliers in the ecosystem ... [I] expect enormous collateral damage," Stephane Teral, a veteran telecom analyst at LightCounting Market Research, told the Nikkei Asian Review.

Huawei has around 28% of the market for telecom equipment. If it can no longer sustain sales, the beneficiaries are likely to be Samsung, Ericsson and Nokia, as well as several Japanese suppliers including NEC and Fujitsu.

Teral said Samsung, an aggressive newcomer in the telecom and networking gear business, would benefit the most because it was already gaining market shares in key markets such as Japan and the U.S., and gaining traction in many other markets.  "Samsung's recent $6.7 billion deal with Verizon is the final cut that puts Samsung in the top rank supplier category along with Ericsson, Huawei and Nokia," Teral said. "That can also help Japan's NEC, which has a partnership with Samsung."

What other opportunity does this offer to rivals?

Samsung, already Huawei's biggest rival in smartphones, has been aggressive in rolling out new products. Its second generation of foldable smartphones has gone on sale in many countries recently, including Taiwan, but Huawei's foldable smartphone is still available only in China. The two biggest smartphone makers by shipments were the first to roll out foldable phones in 2019, in attempts to showcase their technological capability and revive the slumping smartphone market.

Xiaomi, Oppo and Realme -- all rival Chinese brands -- are meanwhile expanding their share in European markets.

"Xiaomi has been very aggressive overseas since the home market is dominated by Huawei. But Xiaomi could again reclaim market share in China if Huawei cannot roll out as many smartphones as it used to," said Chiu Shih-fang, an analyst at the Taiwan Institute of Economic Research.

Apple is also scenting an opportunity. Although its 5G iPhone production is delayed, the U.S. company is scheduled to unveil a new product range on Sept. 15 and has asked suppliers to prepare components for up to 80 million new iPhones, a relatively healthy forecast.

Nomura's Teng said next year all of Huawei's rivals --from Samsung, Oppo, Vivo and Xiaomi, to Apple -- all hope to grab "20 to 30 million units each" from the embattled Chinese company's smartphone shipments, but these ambitious plans may not materialize given the macroeconomic uncertainties. "According to our checks, Samsung and Xiaomi are more aggressive than other players in placing more orders with supply chains," the analyst said.

What does it mean for suppliers?

The rush to get a last batch of inventories to Huawei has given many tech suppliers a bumper August. MediaTek's monthly sales jumped 42% year-on-year. Novatek, a supplier of display integrated circuit driver chips, reported a surge of more than 30% in monthly revenue, and TSMC grew 16% on the year.

Overall Taiwan's electronics component exports to China, its biggest trading partner, reported around 30% growth year-over-year in June, July and August, respectively.

The heat is also being felt in the market for DRAM chips, which are needed in most kinds of electronic devices. Research by Nikkei found a spot price for benchmark 8-gigabyte DDR4 type chips was around $2.95 as of Friday, 7% higher than a recent low at the beginning of the month. According to a source at a Japanese semiconductor trading house, "Huawei is buying up in a last-minute procurement," as Washington's chip embargo approaches.

However there are obvious risks for some companies of a sudden drop in sales after they can no longer ship to Huawei. It will take time for some to rebalance their customer portfolio.

TSMC, which has Huawei as its second-largest client, accounting for nearly 20% of its revenues, is likely to quickly fill some gaps due to strong demand for 5G infrastructure, high-performance computing applications and 5G smartphones from other clients such as Apple, Nvidia and AMD.

However, not every supplier has such a diverse client bases and the slowing global economy adds more uncertainty. ASE Technology Holding, the world's biggest chip packaging and testing house, already warned that the ban on Huawei would hit 2020 revenues by a high single-digit percentage.

South Korean memory chipmakers, such as Samsung and SK Hynix also expect negative impacts, while the overall memory chip market could face some correction after the Huawei ban, analysts say. Huawei is Samsung's second-largest customer in semiconductors behind Apple, accounting for 3.2% of the company's sales, according to Eugene Investment & Securities. For SK Hynix, Huawei accounts for 11.4% of sales.

Some suppliers say they expect demand for 5G will still grow and that their market will be stabilizing after some turmoil. "We can't avoid some short-term impacts," said Joe Tseng, spokesperson for Win Semiconductors, a longtime Huawei supplier. "But for the long term we believe the overall demand will still exist, the market will stabilize and rebalance, and 5G demand is still strong."

Could the situation for Huawei change after the US election?

Regardless of who wins on Nov. 3, many believe the tension between the U.S. and China is here to stay as the world's two biggest economies compete for tech supremacy.

Joe Biden, the Democratic presidential candidate and lead challenger to Trump's re-election, also took a hardline stance on China and called Xi Jinping a "thug." Biden's campaign has highlighted policies that will curb China's economic power and influence, and increase America's competitiveness in tech sectors including 5G and artificial intelligence.

However, Biden has publicly criticized Trump's trade war as "destructive" to the U.S. economy. If elected, Biden said he would work more closely with allies in presenting a united front to pressure China on various issues, but he would also be open to cooperating with Beijing on global challenges.

Many market watchers and industry executives believe under a Biden presidency, there would be more opportunities for dialogue with China and there may be room for Washington to ease bans on some consumer electronics products that are less related to national security and critical areas such as 5G core networks and artificial intelligence.

Additional reporting by Kim Jaewon in Seoul, Yifan Yu in Palo Alto and Kenji Kawase in Hong Kong

The Link Lonk


September 14, 2020 at 04:06AM
https://ift.tt/32rcubl

Huawei enters a new world: How the US ban will affect global tech - Nikkei Asian Review

https://ift.tt/3eIwkCL
Huawei

No comments:

Post a Comment

Featured Post

Huawei lawyers claim emails prove US has no grounds to extradite CFO from Canada - The Guardian

huawei.indah.link US justice department’s battle to extradite Meng Wanzhou from Canada has taken a fresh turn as lawyers for Huawei’s chie...

Popular Posts