Huawei is considering inking chipset supply deals with MediaTek and Qualcomm to bolster its microelectronics supplies, reports Nikkei Asian Review. The firm is exploring new options after losing access to its previous component fabricator, Taiwanese Semiconductor Manufacturing Company (TSMC), last month. The telecommunications conglomerate also reportedly told its smartphone part vendors it would slash its orders for the next two quarters.
According to Gizmochina, the world’s second-largest handset manufacturer delayed its product launch schedule because of recent supply chain problems.
Huawei’s Semiconductor Sourcing Issues
Huawei first encountered difficulties acquiring smartphone components last year after being put on the U.S. Department of Commerce’s Entity List. Following the trade ban decree, American technology companies Broadcom, Google, Intel, and Xilinx cut ties with the Shenzhen-headquartered corporation. Despite losing access to key software and chip vendors, the firm managed to release new Mate and Y9 handsets without American-made parts.
However, in May the Commerce Department issued a new mandate barring companies from selling products manufactured with U.S. technology to Huawei.
Since TSMC’s fabrication process involves American-made tech, the firm reportedly stopped taking new orders from its partner. As the telecom’s HiSilicon chipset unit relied on the Taiwanese brand to make its cutting-edge system-on-a-chips (SoCs), the company now has a major supply chain gap. Though the Sino conglomerate stocked up on processors in anticipation of new export controls, its limited inventory is affecting its core business.
Huawei reportedly cut its Q3 smartphone part orders by 20 percent and might revise them down even further in Q4. The corporation also plans to postpone the release of the new Mate, its flagship handset. Traditionally, the company releases a refreshed iteration of its premium mobile device in the second half of the year.
Huawei’s Next Steps
Nikkei Asian Review states Huawei is seeking to replenish its supply of mobile CPUs, modems, and artificial intelligence accelerator components by making new corporate relationships. The conglomerate reportedly wants to buy chipsets from MediaTek and Qualcomm to power the latest incarnation of the Mate. However, the conglomerate’s efforts to quickly expand its supply chain present its own problems.
For one thing, Huawei would need to redesign its flagship to accommodate an outside brand’s SoCs. It is also unclear how the corporation would acquire components from the San Diego-based Qualcomm without government approval. The Commerce Department issued new regulations to curtail the Sino brand’s access to American tech, so a trade exemption is unlikely.
Despite the international headwinds it is facing, Huawei is still pressing forward.
The company reportedly reached out to SK Hynix and Samsung to gain assurances its memory chip supply will remain consistent. Moreover, Asia Times reports the firm is negotiating a deal with Samsung to trade some of its smartphone market share for 5G equipment. Since the Sino concern has contracts to build 600,000 fifth-generation mobile network base stations, such an exchange might be in its best interest.
While its future business interests are uncertain, Huawei’s remarkable resiliency indicates it will overcome its present challenges.