Huawei’s smartphone supply in danger, while Apple delays iPhone 12 release
September 22, 2020 Category China News Round-up, Weekly
On September 15, several major chipset manufacturers such as Samsung, MediaTek, Qualcomm and Micron have stopped shipments to Huawei, following the coming into force of a U.S. ban on supplies of microchips containing or having been manufactured with U.S. technology. Some suppliers began applying for new export licenses in accordance with the U.S. rules, without much hope of being granted an exception. We are at a very difficult moment, some Huawei employees told the Global Times. However, instead of just complaining about the difficulties, such a crisis could also be turned into an opportunity, some said. “We’ll survive, eventually.” The Global Times reports that Influenced by the military theories of the late Chairman Mao Zedong, Huawei Founder Ren Zhengfei has also introduced military-style discipline to shape Huawei’s corporate culture, often known as “wolf spirit”: Never give in or yield to pressure. It is normal for Huawei staff to work from early morning to late at night, especially in such a difficult period. It has become a battle cry to win the race against the escalating U.S. crackdown.
The upcoming Huawei Mate 40, equipped with the Kirin 9000 chip, could be the last generation of Huawei phones powered by its self-developed chipset. Some industry representatives speculated whether Huawei would abandon its high-end smartphone business as the worst scenario under the U.S. ban. The company has been diversifying its business from its core sector, including its telecom carrier business and smartphones, to the Internet of Things (IoT), hoping to build up a new ecosystem to support various smart devices such as tablets, watches, cars, earphones and laptops. Some industry analysts believe that the company may not have any plan B. It has been also investing heavily in other business sectors such as artificial intelligence (AI) and cloud computing, finding new ways to offset the impact of the U.S. sanctions.
In its latest product announcement, Apple presented the new Apple Watch 6 Series and a new eighth-generation iPad, but not the iPhone 12, disappointing Chinese Apple fans, who are impatient to buy a 5G-capable iPhone. The market share of iPhones in China fell to fifth place in the second quarter, trailing four domestic brands including Huawei, Vivo, Oppo and Xiaomi. Its share dropped to 8% from 9% in the first quarter, according to market research firm Counterpoint. Huawei has already sold more than 93 million of its 5G smartphones this year, according to the China Academy of Information and Communications Technology. If Apple is delaying the release of its 5G iPhone much longer, many Chinese iPhone users could switch to Huawei in order not to miss the latest technology trend. But Huawei is also facing difficult times, as the U.S. has banned the sale of microchips containing or manufactured with U.S. technology, forcing Huawei to speed up finding other chip suppliers. If the company can’t find a solution to its chips supply, deliveries of its 5G phones might be delayed.
Many analysts were confident that from a long-term perspective, Huawei would come up with solutions to deal with the cut-off supplies. Moreover, a total decoupling from China in high technology would also severely hurt U.S. companies, as they would lose the large Chinese market. Over the next three to five years, U.S. semiconductor companies could lose 8 percentage points of global market share and 16 points of their revenue if the U.S. maintains current restrictions on access to products containing U.S. technology by Chinese companies included on the Entity List, a Boston Consulting Group analysis said in March.
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