Monday, 18 October 2021

US relents and supplies Huawei with automotive chips

by Harry Baldock, Total Telecom
Wednesday 25 August 21

Reports suggest that the US has approved licences for Huawei to purchase chips for its growing automotive business

According to Reuters, the US may have granted licences for suppliers to sell chips to Huawei for use in the company’s expanding automotive business.  Since 2019, US sanctions against Huawei in various form have been confounding the Chinese tech giant.  Many of these sanctions were championed by then-US president Donald Trump, whose hard stance on China led to an international campaign to ban the &lsquo…

According to Reuters, the US may have granted licences for suppliers to sell chips to Huawei for use in the company’s expanding automotive business. 

Since 2019, US sanctions against Huawei in various form have been confounding the Chinese tech giant. 

Many of these sanctions were championed by then-US president Donald Trump, whose hard stance on China led to an international campaign to ban the ‘untrusted vendor’ from 5G networks around the world. Since the change of administration and the swearing in of Democratic president Joe Biden, little has changed, with the new president even doubling down on sanctions in March and refusing calls to lift sanctions Trump dealt to Huawei just days before he vacated the White House.

The impact of these sanctions cannot be understated, with Huawei’s lack of access to advanced semiconductor technology from the US wreaking havoc with its smartphone business.

Reliant on these chips to create its high-end handsets, Huawei initially stockpiled crucial chips for these devices and, for a short while at least, proved resilient against the weight of the US blacklisting. The true impact gradually became apparent, however, leaving the company to report a 47% year-on-year decrease in revenue from their consumer division in the first half of 2021. 

“The biggest difficulty for us at present is on mobile phones. We know that [to produce] phones with small size and low power consumption requires advanced technology. Huawei can do the design, but no one is able to help us to produce. We are stuck,” Huawei Chairman Guo Ping said in a Q&A with staff.

From the world’s No. 1 smartphone producer, Huawei has since fallen out of the top 10 for the first time in many years.

In response to these sanctions, China has been rapidly accelerating its domestic semiconductor production capabilities and is making impressive progress, though production of cutting-edge chips may be out of reach for at least a couple of years.

As a result, knowing that it must adapt to prosper and with little signs of the US sanctions easing, Huawei has since diversified its business into numerous new markets, including the connected car industry. This too will rely on semiconductors, but those used for automotive purposes are typically less advanced, making them more accessible for Huawei and thus resistant to US sanctions.

Perhaps this resilience is why Reuters is today reporting that anonymous sources close to the matter say the US is approving licence applications worth hundreds of millions of dollars, allowing Huawei to purchase chips for car components. 

The news could not come soon enough for Huawei, who just yesterday confirmed plans with its automotive partner Changan to release their first co-built electric vehicle model by the end of the year.

 
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