The US ban on Huawei has hampered its ambition in the smartphone market. But will it be possible for the Chinese company to produce in the long run without going to the US?
It is estimated that Huawei's international smartphone sales will lose 40-60%, while this year's total revenue may be reduced by $ 30 billion. However, Huawei is confident that it can exist without going to the US. Kevin Purdy comes from iFixit shared his views on this issue. The company specializes in dissecting and analyzing the components of smartphones, laptops and tablets, asking the question: is there no US, Huawei or anyone who can create a smartphone?
In theory, the answer is "Have" But it comes with two major challenges. First, you must convince your partner companies to take your side, thus building a supply chain that is not affected by the embargo. And second, you must accept not the first to apply some of the latest technology.
Huawei's story is like on film, the hero must stand up to persuade others to follow him, against the tyrannical and harsh ruler. The rebellion is of course much more difficult than the surrender and oppressive choice as before. The only other thing they do is electronic components, not swords, or military.
What is Huawei's trouble?
Since being placed on the embargo list, Huawei has lost its business with many companies. Google blocks access to Android operating systems and related services, ARM halts cooperation. These are the two biggest losses for Huawei, a future without Google and ARM support is really disastrous. In addition, Wall Street Journal estimates that up to 33 of their 92 important suppliers are based in the US.
ARM halts cooperation with Huawei
Huawei's difficulty was not the first time China faced. America used to "treat" ZTE in the same way, eventually the Chinese company gave in after being pushed to the end. They admitted to selling technology from the US to countries that were embargoed, paid a fine of $ 890 million and disciplined many high-ranking officials. By April 2018, the prosecution company lied to the US and was placed on the embargo list. After only one month, the company stood on the verge of collapse because it could not operate without technology from the US. After all, ZTE reached an agreement and suffered business under the supervision of the US government.
Why can't Huawei do everything on its own?
Of course Huawei is not an easy-to-be-subdued company like ZTE. First, they developed the chipsets themselves through subsidiary HiSilicon. Dissecting the P20 Pro, ABI Research has estimated about 27% of the semiconductor components from this company. American firms contributed about 7% of the P20 Pro. No company in the world can be 100% autonomous in their smartphones, so 27% is not inferior. Compared to Samsung, UBS estimates that the latest Galaxy S10 has only about 48% autonomy.
Even the largest smartphone company in the world can only own technology about 48% on the flagship Galaxy S10
Basically, HiSilicon plays a crucial role in Huawei. The smartphone "junior" class like Xiaomi, Oppo, … do not own a semiconductor company so strong. If they can replace the majority of American ingredients with self-developed products, things will become easier. Fortunately, TSMC is committed to continuing to work with Huawei, and TSMC is a very complicated company if the US wants to pressure. Their customers include American businesses themselves, and there are certain names that don't want their partners to malfunction in their operations.
However, there are two very difficult things for Huawei to keep out of the list. One is specialized software for chip design, two are architectural licenses granted by ARM. These are the most fundamental technologies if they want to continue to develop semiconductor products, and they all come from or contact the US. An expert warned that without ARM, the company could not create breakthrough chips in the future. And they certainly can't design their own architecture.
Not Apple, Samsung or Huawei, ARM is really "underground power" behind the mobile industry
Looking from Qualcomm's lawsuit to Apple, we can see real power in the mobile industry. The biggest companies in the market like Apple, Samsung also have to "give up" on producing each component in their smartphones. Qualcomm, ARM, … are the ones that hold the copyright, seize upstream technologies to create a smartphone.
So what can Huawei be autonomous at this time?
There are many companies that are not in the US ban, for example, Samsung, LG, Sony, etc. However, it is complicated for them to keep in touch with Huawei. The economic damage is obvious, even American companies like Google, Qualcomm, etc. are not happy to be blocked from doing business with Chinese companies. But the other companies still have to reconsider their strategy, maybe they use technology from the US, basic licenses from the US, or because of lessons from American companies. As stated at the beginning, the first challenge is to build a close alliance with Huawei against the US ban, will firms like Samsung and Sony be willing to do it?
Huawei is using components from US companies such as Skyworks, Micron, Qorvo, …
However, iFixit tried. Our assumption is that building a smartphone does not depend on US technology. It is certainly not a state-of-the-art device but still has the most minimal equipment, an alternative. This smartphone lacks the most important component – CPU. Because we let Huawei choose for themselves, Kirin chipset of HisSilicon or MediaTek Helio. This is the phone that Huawei can create, if it wants to eliminate US technology.
Screen: Samsung, LG, …
Tempered glass: Asahi Glass.
Camera: Sunny Optical.
Fingerprint sensor: Goodix.
Motor vibration: DMEGC.
USB-C port: Hooya.
Processor: HiSilicon or MediaTek.
RAM memory: Samsung, SK Hynix, …
Internal memory: Samsung, Toshiba, …
Circuit of energy management: Huawei, NXP, ST Micro.
Mobile wave module: Huawei, Murata.
Wi-Fi module, Bluetooth: Huawei, Murata.
GPS: ST Micro positioning unit.
RF transceiver: Huawei, NXP, Murata, …
DAC and amplifier for processing audio signals: Huawei, NXP, ST Micro.
Pressure sensor: ST Micro.
NFC controller: NXP.
In theory, it is relatively stable. At least there is a practical way for Huawei. But as we have warned, this phone is difficult to compete fairly with other competitors, because it is limited to not using technology from the US.
Although theoretically feasible, a phone without US technology will certainly not overthrow Samsung as Huawei has claimed.
The ban may be short-term, but its effects will last long
In the war, any party involved will suffer. And of course the US put Huawei on the embargo list, is also to seek advantage on the negotiating table. If the Chinese government can reach a successful agreement, perhaps Huawei will get rid of the current situation. We know that there are hundreds of other US companies that oppose the ban, because it directly relates to their economic interests.
But with what Huawei has shown, claiming they don't need US technology, they can see that the company is very determined. They planned ahead for today's toughest situation, and contingency plans began to be deployed. In an out-of-control situation of the US government, what if Huawei could handle all its operating systems, chipsets, and so on? for the first time in history since the iPhone launched in 2007. What will happen to Qualcomm, ARM, Broadcom and many other related companies when they lose one of the largest Asian customers? Not to mention, if the smartphone was born, it was like a threat to Qualcomm or Google.
If China successfully negotiates, Huawei can escape this situation, or they will fight to the same embargo
We will not know for sure, until Huawei brings the answer. Can their smartphones exist without American technology?