On September 15, the US restriction on Huawei’s chips has come into effect. TSMC has stopped producing Kirin chips for Huawei. Qualcomm, Samsung, SK Hynix, and Micron no longer supply chips to Huawei.
The Chinese media “Securities Times” quoted news from Huawei’s industry chain as saying that Huawei currently does not have a plan B. In the future, it may “reduce production dimension” from high-end mobile phones to products such as automobiles and OLED screen drivers, and complement it with software and mobile phone peripheral products to address the loss of revenue.
In addition, some dealers have said that it is difficult to purchase Huawei mobile phones recently unless they are bundled with watches, bracelets, tablets, speakers, headphones, and other products.
On May 15 this year, the United States further restricted Huawei’s use of chips after placing it in the “Entity List” last year. The US Department of Commerce announced that it would strictly restrict Huawei’s use of US technology, software design, and manufacturing semiconductor chips to protect US national security.
The United States has given a 120-day grace period during which companies such as TSMC could still continue to supply Huawei. September 15 is the first cut-off day for Huawei’s chip supply. Huawei’s consumer business CEO Yu Chengdong also said earlier that once the US ban on the supply of Huawei chips takes effect, Kirin flagship chips may become extinct.
For the chip supply interruption, whether Huawei has Plan B became a big question. “Securities Times” reported that Huawei’s partners said: “Does Huawei have plan B for the chip supply cut-off? According to the news from Huawei’s executives, it is temporarily not yet available. The specific countermeasures should mainly be to seek domestic alternatives.”
According to the report, a person familiar with Huawei’s industry chain bluntly said that it was also difficult for Huawei’s chips to seek domestic alternatives. On the one hand, high-end chips have technical bottlenecks and it is difficult to bypass US technology and equipment restrictions. Low-end chips can be used, but it means that Huawei will have to “reduce its production dimension”. On the other hand, Yu Chengdong said building an independent chip production chain is not an overnight task. It takes a long time and is not an industry that can be created with money alone.
The above-mentioned people believe that Huawei is really “having no way out” now. “It is really impossible to do high-end. In the future, we can only reduce to producing cars or OLED drives, and develop other mobile peripheral products such as laptops and tablets.” This year, it was also revealed in August that Huawei was preparing to vigorously develop notebook and tablet businesses in a difficult period to cope with US chip restrictions.
On the eve of the chip supply cut-off, Huawei also announced a series of new software developments at the developer conference, including the launch of Hongmeng Harmony OS 2.0, HMS new developments and EMUI11. Next year all Huawei mobile phones will support the Hongmeng system, etc., indicating that Huawei intends to strengthen software, ecosystems, and systems to make up for the damage caused by restrictions on hardware and seize opportunities for the development of the Internet of Things in the next decade. Yu Chengdong also said that Huawei mobile phones will fully support Hongmeng 2.0 as early as 2021.
Chinese Netizens illustrate that Huawei’s Hongmeng Operating System (OS) is just a copy of the Android OS.
Chinese netizens show that the source code of Hongmeng OS imports the Android code. The developers of Menghong did not even bother renaming the Android code.
Troubled Huawei could lead to the downfall of Shenzhen
Earlier this year, the CCP media reported that Huawei is the main source of revenue for the city of Shenzhen with high-paying jobs, consumptions, and housing demands. Some estimated that Huawei may account for 1/5 of the economic activities in Shenzhen.
Shenzhen is the one of the top five cities in China with vibrant economy. But now it is shadowed by uncertainty.