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U.S. sanctions deplete stocks of Huawei's advanced chips.
US sanctions imposed on Huawei back in the days of US President Donald Trump have led to the fact that the company has finally run out of stocks of its own flagship chipsets designed for smartphones.
Huawei-owned HiSilicon chipsets have finally run out of stock recently, according to Hong Kong-based Counterpoint Research, which relies on its own sources. Counterpoint says HiSilicon's share of the global smartphone market dropped to zero in the third quarter from 0.4% in the prior quarter, compared to 3% in the same period last year.
According to the publication, Huawei's smartphone business has already been hit hard by US sanctions, which were first imposed on the company in 2019 and later extended.
The Counterpoint report clearly illustrates the impact of the expanded US sanctions on Huawei in 2020. This potentially predicts the impact of sanctions on other Chinese companies that have recently come under US export bans that prevent the supply of advanced US chips, chip-making equipment and specialized tools to the Celestial Empire.
Restrictions on Huawei began in 2019, when the Trump administration, represented by the Department of Commerce, blacklisted Huawei, HiSilicon and 113 other subsidiaries of the tech giant for “national security reasons.” This prevented companies from purchasing components, software, and technology from US organizations unless they obtained special export licenses. In other words, Huawei could no longer purchase Qualcomm chips, and also lost direct access to chip manufacturing equipment from American manufacturers like KLA or Applied Materials.
In 2020, the sanctions were expanded - companies were forbidden to buy semiconductors manufactured even outside the United States if American equipment or software was used in their production - unless permission was obtained from the American authorities. In other words, Huawei couldn't turn to manufacturers like TSMC to produce chips of its own design, since this contract manufacturer uses a lot of American technology.
This led to the deplorable position in which Huawei found itself in the smartphone market. Without the advanced chips developed by the HiSilicon division, it only has Qualcomm's 4G-only chipsets available, even for flagship models. At one time, the company made large stocks of components, but this only delayed the denouement.
However, Huawei, with its vast experience in the industry, is not going to give up and leave the smartphone market. In October, the media reported that the company is reengineering its smartphones to use less powerful chipsets manufactured by mainland Chinese companies - this will allow the manufacturer to partially bypass US trade restrictions. It is expected that such mobile platforms will also support 5G. However, they will be “slower” than the solutions of competitors, in respect of which the United States has not introduced its own restrictions.