It's been a tough week for Huawei. After Trump signed an executive order on Thursday which put the company on its "entity list", it then got cut off from some of its biggest partners. That included Google, Qualcomm, Intel, Micron and Microsoft. But the biggest blow didn't come until Tuesday, when ARM also cut business ties with Huawei.
ARM cutting off Huawei is a far bigger deal than Google, Qualcomm, Intel, Micron and Microsoft cutting it off. And here's why.
Huawei loses an ARM
ARM or Advanced RISC Machines, is a pretty big company, in the world of computing. Many outside of the mobile industry may not know this but, ARM is responsible for every single smartphone, tablet, and wearable that is on the market right now. Even though those devices may be running Snapdragon, Exynos, or Kirin chipsets, ARM is still responsible for them.
You see, ARM designs the architecture that is used by just about every chipset that powers a mobile device (with the exception of some iPhones that are powered by Intel chipsets). Its architecture and instructions are licensed out every smartphone maker out there, making them the lifeblood of any smartphone. And without their help, Huawei's smartphone business is dead. Even if it does launch its own mobile platform and it's a success, it cannot make chipsets for those smartphones without ARM's help.
The skinny of this is the fact that Huawei not only cannot make a smartphone now, it cannot even make a new processor for that smartphone. Which means as soon as they run out of the stockpile of Kirin chipsets it has currently, it won't be able to make any more smartphones, tablets or smartwatches. Now that, my friends, is a pretty big freaking deal.
Existing chipsets can still be manufactured
The interesting thing about this, is the fact that Huawei will still be able to manufacturer existing chipset designs, like the Kirin 980 that powers the Huawei P30 line. So even when it runs out of Kirin 980 chipsets that have already been manufacturer, it can still make more. But it cannot make a Kirin 990, until ARM decides to resume business ties with Huawei.
But that doesn't mean much for Huawei's future. Without ARM's architecture and instructions, it won't be able to compete with Qualcomm, Samsung, MediaTek and other chipset makers out there. Huawei is at a huge disadvantage, and seeing as they can't buy chipsets from Qualcomm and Intel right now, that means it really cannot even make a smartphone.
The Kirin 980 is a pretty impressive chipset, but at this point, it's already pretty old. It debuted last fall, and has been powering the HONOR Magic 2, 20 and 20 Pro and the Huawei Mate 20, Mate 20 Pro, P30 and P30 Pro. It's not really that new, and while it is faster and benchmarks better than the Snapdragon 855, that won't last long.
What about the many Chinese chipset competitors?
There are many mobile chipset competitors in China that Huawei could get chips from. But, Huawei would still run into the same issues. While another Chinese company, like MediaTek can still use ARM technology. MediaTek would likely not be able to sell its chipsets to Huawei, without risking itself getting banned from the US, the UK or any other country.
Huawei could definitely find the other parts needed to build a smartphone, from other companies in China. Remember, just about every company that makes parts in the US, has a Chinese clone that will likely make it for less. But the only thing there is, Huawei would need to spend more money on R&D, and building up relationships with those companies. Companies that they never worked with before. So it's just a huge mess for Huawei, unfortunately.
There's also the fact that these Chinese competitors are likely on the entity list as well. Meaning that they cannot work with US companies either. Trump did add a pretty large number of Chinese companies to the entity list, in an effort to protect US technology companies. But Huawei is the one getting all of the attention, because it's the biggest one on the list. It'll likely all go away magically, once Trump and Xi get their Trade Deal in place, which hopefully will happen sooner rather than later.
Losing Google was big, but losing ARM was a much bigger blow
When news broke over the weekend that Google had cut off Huawei, and revoked its Android license, many though that it was the end of Huawei. Which is a fair thing to say. How can you make a smartphone without Google's services, or getting Google's help in getting Android on your smartphone. This is a bigger deal in the West than it is in China, but still a big deal. Mostly because Google services are banned in China, so a Google-less Android operating system is par the course in that country.
Not only did Huawei lose Google services, it also lost access to early Android code. Meaning it would need to wait for new versions of Android to hit AOSP before they could start building these updates for their phones. Since AOSP doesn't get the code as quickly as it used to, this puts Huawei at a severe disadvantage, compared to its competitors.
These days, open-source Android is very barebones. If you were to compile AOSP and put it onto a Pixel 3 XL today, it would look a lot different than the version of Android that Google ships on the Pixel 3 XL. That is because there are a lot of changes that Google adds to Android, but those are not part of the open-source version. And with Huawei being forced to use the open-sourced version of Android, it would lose out on all of that.
Losing Google did put Huawei in a big hole, but it was something that Huawei could recover from. It might take some time, but it was recoverable. Now ARM on the other hand, is a much bigger blow.
As we've explained here, ARM is essentially responsible for the brains of every smartphone on the planet. So without their help, Huawei cannot even make a smartphone. Now, one might argue that you cannot make a smartphone without Google, while many would agree, it is possible. It might not be a great smartphone or a popular one, but it is possible. Without ARM, it is not possible.
Temporary license is just that, temporary
Huawei did get a temporary license from the US Commerce Department on Monday. Which does allow it to work with US companies until August 19 (or 90 days). This gives Huawei time to work things out, and possibly update all of its smartphones and other products that are already on the market. But it also makes this look very similar to what happened with ZTE.
For those that might not remember, last year, ZTE was effectively kicked out of the US. ZTE USA had to shut down, after the Trump Administration banned it. Now it was for different reasons. ZTE was selling technology that included some US tech, to countries that the US had sanctions in place for. Those included Iran and North Korea. ZTE eventually was let back in, after a few temporary licenses were given, and a huge payment to the Commerce Department was made.
It does look very similar to ZTE, but Huawei has been a problem for the US government for a much longer time than ZTE has. So while it looks like Huawei is a pawn in Trump's Trade War, this might just be the end of Huawei in general. But rest assured, China will be retaliating at some point. In fact, it's a little surprising that they have not retaliated yet.
Losing ARM was a bit of a surprise for a lot of people, possibly even Huawei themselves. The reason why is, ARM is not a US company. The executive order that Trump signed, banned Huawei from working with any US company, without a permit from the US Commerce Department. ARM is a UK-based company, so they did not need to abide by that executive order that Trump signed last week. However, the UK has also been following the US' lead when it comes to banning Huawei. Including Vodafone and EE cancelling their orders for the Huawei Mate X 5G that was supposed to launch today, but it's now nowhere to be seen.
We've never seen a systematic destruction of a tech company, the way that Huawei has been killed off. In the matter of a week, Huawei has essentially been killed off, not only from the US, but basically any country outside of China. It's pretty insane how this all came about, and how quickly all of these companies are cutting ties with Google. But Huawei is being used as a pawn in Trump's Trade War with China, which really sucks for consumers and especially Huawei.
Who's next to cut off Huawei? We'll have to wait and see. It seems everyday this week, more companies are coming out and cutting ties with Huawei.