China’s Huawei is set to overcome the US ban with the return of 5G phones

By David Kirton

SHENZHEN, China (Reuters) – China’s Huawei Technologies is eyeing a comeback in the 5G smartphone industry by the end of this year, research firms have found, signaling a comeback after a U.S. ban on equipment sales took hold. decimated its consumer electronics business.

Huawei should be able to source 5G chips domestically using its own advancements in semiconductor design tools as well as chip manufacturing from Semiconductor Manufacturing International Co (SMIC), three companies from third-party technology research covering the Chinese smartphone industry.

The companies, citing industry sources including Huawei suppliers, spoke on condition of anonymity due to confidentiality agreements with customers.

Huawei declined to comment. SMIC did not respond to a request for comment.

A return to the 5G telephony market would mark a victory for the company, which for nearly three years said it was in “survival” mode. Huawei’s consumer business revenue peaked at 483 billion yuan ($67 billion) in 2020, before plummeting nearly 50% a year later.

The Shenzhen-based tech giant once vied with Apple and Samsung to be the world’s biggest handset maker until a round of US restrictions from 2019 cut off its access to critical chipmaking tools. production of its most advanced models.

Both the US and EU governments have branded Huawei a security risk, a charge the company denies. Since then, Huawei has only sold limited batches of 5G models using stock chips.

Stuck in the sale of latest-generation 4G handsets, Huawei fell from most global rankings last year when sales hit a low point, despite reaching a 10% market share in China in the past year. first quarter, according to the consulting firm Canalys.


One of the research companies said it expected Huawei to use SMIC’s N+1 manufacturing process, but with an expected usable chip yield rate of less than 50%, 5G deliveries would be limited. at around 2 to 4 million units. A second firm estimated that deliveries could reach 10 million units, without giving further details.

Huawei shipped 240.6 million smartphones worldwide in 2019, its record year, according to Canalys, before selling off its Honor unit which accounted for almost a fifth of shipments that year.

The state-backed China Securities Journal reported this month that Huawei had raised its mobile phone shipment target for 2023 to 40 million units from 30 million at the start of the year, without making referring to 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 that they base the predictions on information they had received through verifications with contacts in Huawei’s supply chain and recent company announcements.

However, US restrictions cut off Huawei from Google’s Android operating system and the set of development services on which most Android apps are based, limiting the appeal of Huawei handsets outside of China.


The research firms noted that Huawei announced in March that it had made breakthroughs in electronic design automation (EDA) tools for chips produced at 14 nanometer (nm) technology and above.

Chip design companies use EDA software to produce the blueprints for chips before they are mass-produced in fabs.

The research firms, citing their own industry sources, believe that Huawei’s EDA software could be used with SMIC’s N+1 manufacturing process to manufacture chips at the equivalent of 7nm, the powerful semiconductors typically used in 5G phones.

Washington banned SMIC from obtaining an advanced chip-making tool called EUV machine from Dutch company ASML, which is essential in the 7nm chip-making process.

But some analysts have found signs that SMIC has nevertheless managed to produce 7nm chips by tweaking simpler DUV machines that it could still buy freely from ASML.

The second research company said it noticed that Huawei asked SMIC to produce sub-14nm chip components for 5G products this year.

The projected rate of return of less than 50% means 5G chips are “going to be expensive”, said Doug Fuller, who studies chips at Copenhagen Business School.

“I guess if Huawei wants to eat the cost, they can do it, but I don’t see these chips as competitively priced,” Fuller said.

($1 = 7.2023 Chinese yuan renminbi)

(Reporting by David Kirton; Editing by Jamie Freed)

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