This article is more than 1 year old

US sanctions drain Huawei of homegrown advanced chips

Huawei to the chipless zone prediction

Chinese telecom giant Huawei has reportedly run out of homegrown advanced chips for smartphones due to Trump-era US sanctions that were enacted.

A report from Hong Kong-based firm Counterpoint Research said it determined that Huawei recently depleted inventory of its smartphone chipsets from the company's HiSilicon chip design arm, based on channel checks and sell-through data.

Counterpoint said HiSilicon's share in the global smartphone market dropped to zero in the third quarter after declining to 0.4 percent in the second quarter from 3 percent the same period last year.

As The Register recently pointed out, Huawei's Android handset business had already taken a big hit due to US trade restrictions that were first placed on the company in 2019 and then expanded the next year.

But the new Counterpoint report illustrates the effectiveness of the expanded US restrictions that were enacted on Huawei in 2020. This potentially foreshadows the troubles ahead for a broader swath of Chinese companies that were recently subjected to Uncle Sam's new export ban, which targets US-made state-of-the-art chip-making equipment and tools in addition to advanced chips made in America.

The restrictions for Huawei began in 2019 when the Trump administration placed the firm, along with its chip division HiSilicon and 113 subsidiaries, on the US Department of Commerce's so-called Entity List on the grounds of national security concerns. This prevented the company and its affiliates from obtaining American-made components, software, and other technology from US organizations, unless it received a special license.

In other words, if Huawei wanted to buy chips from American firms like Intel or Qualcomm or purchase chip-making equipment from US-based firms like KLA or Applied Materials, it faced a high barrier in getting access.

The Trump-era White House then expanded restrictions on Huawei in 2020 by blocking the company from acquiring semiconductors that were manufactured overseas using US software or hardware, unless it received permission from the US. This was a major step in curtailing Huawei's silicon efforts because it meant the firm likely couldn't turn to a contract chip manufacturer like TSMC to fabricate its designs if the foundry was using any US equipment or design tools. A few months later, TSMC announced that it would no longer manufacture chips for Huawei due to the US rules.  

This brings us to where Huawei is now: without advanced chips from its HiSilicon division and having to rely on 4G chipsets from US firm Qualcomm, obtained through a special license, for its latest flagship smartphones. For a while, the company did stockpile components to delay this fate, but Counterpoint's report shows that the depletion of the advanced chipsets designed by HiSilicon was an inevitability.

Huawei isn't out of the fight to win back smartphone market share, however.

The Financial Times reported in early October that Huawei is redesigning its Android handsets to use less advanced chips fabricated by Chinese companies, which would help the firm sidestep US trade restrictions. These re-worked chip designs will apparently include 5G connectivity, but they will likely be slower than chipsets made by foreign competitors who aren't held back by US sanctions. ®

More about


Send us news

Other stories you might like