China’s Huawei is poised to make a spectacular comeback in 5G smartphones after its consumer electronics business was decimated by US tech and export curbs.
Huawei Technologies should be able to procure 5G chips domestically using its own advances in semiconductor design tools, along with chipmaking from Semiconductor Manufacturing International Co (SMIC), by the end of the year, according to three third-party technology research firms covering China’s smartphone sector.
A return to the 5G phone market would mark a victory for the company that for almost three years said it was in “survival” mode. Huawei’s consumer business revenue peaked at 483 billion yuan ($67 billion) in 2020, before plummeting by almost 50% a year later.
The Shenzhen-based tech giant once vied with Apple and Samsung to be the world’s biggest handset maker until rounds of US restrictions beginning in 2019 cut its access to chipmaking tools essential for producing its most advanced models.
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The US and European governments have labelled Huawei a security risk, a charge the company denies. Since then, Huawei has only sold limited batches of 5G models using stockpiled chips.
Stuck selling last-generation 4G handsets, Huawei fell from most rankings worldwide last year, when sales reached a low point, though it rose to a 10% market share in China in the first quarter, according to consultancy Canalys.
One of the research firms said it expected Huawei to use SMIC’s N+1 manufacturing process, though with a forecast yield rate of usable chips below 50%, 5G shipments would be limited to around 2 million to 4 million units. A second firm estimated shipments could reach 10 million units, without providing further details.
Huawei shipped 240.6 million smartphones worldwide in 2019, its peak year, according to Canalys, before selling its Honor unit that accounted for nearly a fifth of shipments that year.
The state-backed China Securities Journal newspaper this month reported Huawei had raised its 2023 mobile shipment target to 40 million units from 30 million at the start of the year, without referencing a return to 5G phones.
Huawei could produce 5G versions of flagship models like the iPhone rival P60 this year, with new launches likely in early 2024, the three research firms said, adding they were basing such predictions on information they had received via contacts in Huawei’s supply chain and recent company announcements.
However, US restrictions have cut Huawei off from Google’s Android operating system and the bundle of developer services upon which most Android apps are based, limiting Huawei handsets’ appeal outside of China.
Chip Design Workarounds
The research firms noted Huawei in March announced it had made breakthroughs in electronic design automation (EDA) tools for chips produced at and above 14 nanometre (nm) technology.
Chip design companies use EDA software to produce the blueprints for chips before they are mass manufactured at fabs.
The research firms, citing their own industry sources, believe Huawei’s EDA software could be used with SMIC’s N+1 manufacturing process to make chips at the equivalent of 7 nm, the powerful semiconductors typically used in 5G phones.
Washington barred SMIC from obtaining an advanced chipmaking tool called an EUV machine from Dutch firm ASML that is critical in the process of making 7 nm chips.
But some analysts have found signs SMIC has nevertheless managed to produce 7 nm chips by tweaking simpler DUV machines it could still purchase freely from ASML.
- Reuters with additional editing by Sean O’Meara
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