Samsung may have decided against helping Huawei with chips for its smartphone ambitions, according to a recent report from DigiTimes. That’s based on sentiments reportedly expressed by “industry observers” who claim that such a partnership is “unlikely.”
The exact reason or reasons behind the claims have not, however, been divulged. Instead, the insiders point to the ongoing wave of US sanctions and other actions against Huawei. The government has made working with the company, outside of a few small concessions, difficult. In many cases, it has outright prevented Huawei partners from working with it.
More recently, moves by the US to move some production facilities into the country have further complicated matters. In effect, the government has forced various companies to choose between working with Huawei and working with US companies. In part, that’s because the US is incentivizing companies to do so. But, in some cases, it’s also requiring some tech be made in the US if it’s to be sold and used in the US.
As a result, Huawei is being forced to turn inward. Conversely, it has also reportedly been exploring partnerships with other companies outside of China, such as Samsung. That’s because those companies aren’t using US-made components in at least some of their solutions, making them a viable option for Huawei’s consideration.
Huawei continues facing difficulties on smartphone chips and more
A proposed deal had been reported that suggested Samsung might step in to be a saving grace for Huawei on smartphone chips. The reports indicated that Samsung and Huawei were close to reaching a supply agreement. Samsung would, under that deal, be providing Huawei with necessary supplies to continue the mass-production of its 5G equipment. Specifically, that would have been wireless chips.
In return, Huawei would be paying the company an exorbitant cost, attributed to the fact that it has relatively few options remaining. Especially since TSMC, MediaTek, Qualcomm, and a few others are effectively out of the question.
The US government could not have directly dished out any consequences against Samsung for supplying Huawei. But it may have reacted with further sanctions or rules that could ultimately have harmed the company’s position. And it may well have had grounds to do that.
Huawei and Samsung working together would essentially put the two largest OEMs in the world in a partnership. The former company overtook Samsung on smartphone sales in April — knocking Samsung from its throne as the largest OEM, albeit briefly.
That could easily be viewed as bad for consumers globally or as anti-competitive. That’s even setting aside concerns about national security that might be raised. Although any such allegations or speculation would undoubtedly be subsequently and summarily denied by Huawei.
Where will Hauwei turn now?
Now, Huawei is running out of options in terms of partnerships for the chips used in its smartphone division. That’s if this recent report is accurate. But it isn’t out of the market entirely just yet. Not only has it been performing above expectations, even temporarily overcoming Samsung. The company has enough chips manufactured by TSMC, allowed by rules set by the US government, that it can make it to 2021.
Where, exactly, it might turn, is less clear. But that gives Huawei at least half of a year to get its affairs in order and find an alternative solution.