Analyst Says Huawei May Be Forced To Use Snapdragon Chips In 2021

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Huawei may ultimately be forced to turn to Snapdragon chips for its 2021 flagships — tentatively the Huawei Mate 50 and P50. That's according to recent reports citing KeyBanc Capital Markets analyst John Vinh.

Mr. Vinh indicates that Huawei likely won't be able to use HiSilicon to source chipsets for its cutting-edge smartphones in 2021. That's a direct result of sanctions and rules created amid an ongoing trade war between the US and China.

It's also the result of a decision made by the current US administration to add Huawei to an Entity List. A successive run of sanctions has forced the company to look for internal solutions and not all of those appear to be panning out.

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The analyst says that one likely result is that the company will be forced to utilize Qualcomm's Snapdragon chipset in its flagship phones in 2021. While Huawei can obtain enough hardware from current loopholes in the sanctions to power its Mate 40 and P40, it won't be able to next year. That would mean that the Huawei Mate 50 and P50 could be powered by the top Snapdragon chips for that year instead.

Why can't Huawei use HiSilicon Chips instead of Snapdragon?

Of course, Huawei has its own AI-focused in-house Kirin chipsets built by its HiSilicon subsidiary. Those have been driving the company's smartphones and flagships for years as well as the handsets made by Honor. So there may be some confusion as to why Huawei can't just use those instead of Snapdragon SoCs in 2021. The issue at contention here is HiSilicon's reliance on components for chips from US manufacturers.

A recent rule change, implemented in late April, will make it difficult for Huawei to source those. Specifically, the rule — dubbed the US Foreign Direct Product Rule (FDPR) — places controls on shipped content that is at least 25-percent American-made. Summarily, it puts limitations on American-made content is eligible for exportation to foreign countries.

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As a result of a large number of related rules and sanctions placed against the company, Huawei has been forced to shift manufacturing. In mid-April, it moved production from TSMC to China-based SMIC, for instance.

All of that is compounding to make building around HiSilicon's Kirin chipsets less feasible. In effect, the rules and sanctions are beginning to make reliance on in-house hardware less feasible. Unless Huawei can find some other way to get its components, it's going to have to look elsewhere. Particularly for its popular flagships series devices.

Qualcomm may be out of the question too

Now, Qualcomm may actually be off of the table for Huawei too. Whether or not that's the case will largely come down to yet another decision by the US government. The benefits would arguably be weighted heavily in Qualcomm's favor. But the US-based company would still be required to apply for a license to interact with Huawei. That comes back to the Huawei being placed on the Entity List, marking it as a plausible national security risk.

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Additionally, Qualcomm would need to convince Huawei to utilize its chips. Mr. Vinh does believe that the US government would grant the requested license. But Huawei has increasingly isolated itself from US companies. It's also claimed that it can overcome the sanctions on its own merit, with its own solutions — simultaneously denying claims leveled against it.

Qualcomm has already attempted to work out a deal with Huawei on 5G technology and failed. So it may not be able to convince the company to utilize its chipsets for mobile devices either.