Huawei will be a shadow of its former self if US doesn't ease restrictions by next year: report
Nikkei Asian Review reports that the company's suppliers are scrambling to deliver orders before the US mandated deadline expires.
The company was apparently considering buying off the rack solutions for future smartphones from chip makers like Qualcomm and MediaTek. A new restriction means it could no longer purchase chips from manufacturers who use US-origin technology.
Its suppliers are allowed to honor previous orders, but they must be shipped by midnight on September 14. This means the deadline is just three weeks away.
Huawei is in a chaotic state right now
Per the new report, the company is currently in survival mode and is trying to stockpile crucial components such as 5G mobile processors, Wifi, and display driver chips from companies including MediaTek, Novatek, RichWave, and Realtek.
Memory chip makers such as Samsung and SK Hynix and camera lens suppliers like Largan Precision and Sunny Optical Technology also hope to ship products to Huawei by September 14.
All of these companies use American technologies and software to manufacture products and thus, they must comply with the ban.
To meet the deadline, some suppliers might even deliver half-finished products that have not been tested or assembled.
One person who is privy to the matter said:
Thanks to its inventories, the company could ship around 195 million smartphones this year, according to GF Securities' analyst Jeff Pu. If the US doesn't soften its stance against the manufacturer, sales could fall to 50 million units in 2021.
Previously, the company was hoping to sell 130 million 5G smartphones in 2021, according to the semiconductor research company Isaiah Research.
Its supply chain partners will also suffer, as detailed by Digitimes. The publication claims the restrictions placed on Huawei by the US will impact the overall sales of 5G mobile APs to the Chinese market in Q4 2020.
Huawei will lose its competitiveness without Kirin chips
Huawei currently dominates the domestic market, but it is expected to lose 30 percent of its share to local rivals like Oppo, Vivo, and Xiaomi next year. Globally, Samsung and Apple will probably be the biggest beneficiaries.
Chinese chipmaker Unisoc Technologies could scoop up HiSilicon's share in the long run.
Oppo is also reportedly ramping up efforts to make custom SoCs. It will reportedly make chips for AIoT applications first before developing smartphone chips.
As for Huawei, it will have to think of a long term plan to survive without US technology.
In the near future, we will likely see the company reorganize and scale down operations to stay profitable. Side by side, US companies like Qualcomm will probably continue to lobby against the restrictions.