Huawei's latest blow could signal the end of its smartphone business

Huawei no longer has access to the ARM chip architecture

Citing an internal memo, the BBCreports that the company behind the ARM architecture has told employees that its designs contain “US original technology.” As a consequence, it believes that it’s affected by Trump’s latest ban and has ordered that all “active contracts, support entitlements, and any pending engagements” with Huawei be halted immediately. 

It’s reported that the company also instructed employees to notify Huawei that, due to the “unfortunate situation,” it could no longer “provide support, deliver technology (whether software, code, or other updates), engage in technical discussions, or otherwise discuss technical matters with Huawei, HiSilicon or any of the other named entities.”

As another blow for Huawei, the ban also appears to apply to the chip vendor’s ARM China subsidiary which was set up just last year as a joint venture with the objective of developing, selling, and supporting products in the region, thus leaving Huawei without any access to the ARM architecture.

The information provided by the BBC reveals Arm Holdings informed some staff on May 16th and subsequently sent out the aforementioned memo on May 18th. Despite the US government issuing a 90-day reprieve on May 20th, though, sources within the company revealed that work with Huawei hasn’t yet restarted and an intention to do so hasn’t been communicated either.

If nothing changes, Huawei won't be able to create Kirin processors

Despite the fact that Huawei designs its own processors through subsidiary HiSilicon, these chips rely heavily on the ARM architecture. In fact, most of Huawei’s recent offerings utilize a number of ARM-based Cortex cores created by the British chip designer. 

Due to the ban, Huawei will no longer have access to the architecture or the custom cores. This means that Huawei and its subsidiary won’t be able to create chips for the company's future devices. The only way to do so involves finding a completely different architecture that doesn’t utilize US technology or developing a chip architecture of its own, something that would take years. But in this case, Huawei would face a separate problem – Android only supports ARM and Intel's x86.

According to the report, Huawei is free to continue manufacturing its existing chips, so the Kirin 980 used inside the Huawei P30 and Honor 20 lineups, and the Kirin 710 that Huawei includes in its mid-range devices are under no threat. Work on the next-gen Kirin 985 is also unaffected. However, this chipset hasn’t yet been completed, meaning that, as things stand, it can’t be finished and won’t make its way into the Huawei Mate 30 series that is planned for later this year unless Huawei rebuilds it from scratch. 

What does this mean for Huawei's smartphone business?

Huawei has been preparing for the worst over the course of the past few months by creating its own Play Store rival and continuing development on its Android replacement. However, the company didn’t expect to lose access to Google’s entire catalog of apps alongside many other American offerings.

Presumably, Huawei also wasn’t expecting any issues with Arm Holdings, something that could potentially lead to the company’s exit from the smartphone market. After all, while Huawei could survive without the software offered by American companies, the inability to create processors for its own smartphones means that, unless the situation changes, eventually it won’t be able to produce competitive devices. Huawei also may not be able to purchase chips from rival companies due to the fact that most are based on the ARM architecture.

Ultimately, only time will tell what happens to Huawei and its smartphone business. But if a trade deal isn’t reached soon between the US and China – Huawei is most likely being used as a bargaining chip by Trump – Huawei’s future could be pretty bleak.