Huawei May Be Forced To Draw From The Outside For 2021 Flagship Chips

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Huawei may be forced to work with third-party OEMs for its 2021 flagship chips. That's based on new reports out of its home region, citing an industry insider. The details, posted to China's Weibo social network, don't specify a probable partner. Instead, they indicate that Huawei's in-house unit, HiSilicon, simply won't work for the 5nm chipsets.

News that it could find a third-party vendor to replace its in-house development for 2021 should be taken with a grain of salt. But it also shouldn't be too surprising. The remainder of Huawei's 2020 flagship devices will ship with its chips, based on current expectations. That's because Huawei was able to place an order for its chip components with TSMC. That will continue to September 15, when US government orders will put a halt to sales.

That should leave the smartphone maker with enough chips for HiSilicon to complete its 5nm Kirin chips for the upcoming Huawei Mate 40. But Huawei is struggling to find a supplier for next year, regardless. The rule in question stops even overseas companies from supplying components to Huawei. Specifically, if those were made using US technologies.

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Who does that leave to make Huawei flagship chips for 2021?

The move by the US doesn't leave a lot of wiggle room for Huawei. In fact, by all accounts, even companies operating outside of the US such as TSMC, Samsung, MediaTek, and China's own SMIC can't supply the chips. And, even with licensing, that might allow it, Qualcomm is a US company. So it may be off the table entirely as a way for 2021 flagships from Huawei to remain competitive.

Qualcomm may still work to convince Huawei to utilize its chips in the interim. But Samsung or MediaTek may be more viable options. That's based on a number of reports. Both companies and even TSMC are allegedly looking to set up their own production lines that don't include any US equipment at all. TSMC provides chips for MediaTek while Samsung produces its own in-house hardware.

If either company follows through, that could give Huawei a way to step around US sanctions.

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Not that Huawei seems to need the reprieve

Now, Huawei may not actually need extra help either. At least, that seems to be the case given the company's current global standing. Following skyrocketing sales of its devices, setting aside its maintained lead in 5G networking tech, Huawei has officially held onto its spot at the world's top smartphone manufacturer.

It has, in the meantime, started hiring on talent in chip development and for other units. The end goal, obviously, is to further reduce dependency on US-related companies. Considering its position in the overall smartphone market, that may not be out of the question either. While there's a lot of work and investment to build out such a solution, Huawei is well-positioned to do so.

Huawei first bypassed Samsung back in April, falling just short of its initial goal to become the top seller. Then, in May, it retained that position for a second month. Although expenditures and a refocus into the chip segment might ultimately drop its placement on the list, it is in a position where that's not likely to kill its business.

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