US sanctions bite as Huawei admits ‘big loss’ as supply of high-end Kirin smartphone chips to run out soon
- Smartphones come under Huawei’s consumer business group, the company’s biggest operating segment, which generated US$36.5 billion in revenue in the first six months
- Huawei’s most advanced processor, the Kirin 900 series, accounted for 36 per cent of total smartphone shipments in the first quarter, according to Omdia
Huawei Technologies’ reign as the world’s No 1 smartphone vendor may be short lived, as the head of its consumer business unit publicly admitted that the company may not be able to ship handsets with its high-end Kirin chips after this year owing to US trade sanctions.
“We are in a difficult situation … Huawei’s smartphones have no chip supply,” Richard Yu Chengdong, chief executive of the company’s consumer business group, said on Friday at the China Info 100 conference, according to a video recording of his comments posted on multiple websites. “This year may be the last generation of Huawei Kirin high-end chips … This is a big loss for us,” he said.
Huawei, which overtook Samsung Electronics in the second quarter to become the world’s No 1 smartphone vendor, is at the epicentre of escalating US-China tech tensions. In May, Washington expanded its sanctions against Huawei by prohibiting foreign chip makers like Taiwan Semiconductor Manufacturing Co (TSMC) from using US technology to produce chips for the Chinese company. That move followed its inclusion in a US trade blacklist a year earlier.
Huawei declined to comment for this story.
With its in-house HiSilicon chip unit, Huawei was able to get around the first US ban by designing its own chips to replace those it could not buy from US suppliers like Qualcomm, but it lacks the ability to manufacture the devices.
However, that loophole was closed with a new direct product rule sanction that takes effect September 15, which will require TSMC or any other non-US semiconductor maker that uses US equipment in its wafer fabs, to apply to Washington for a licence to ship chips to Huawei.