Huawei running out of high-end smartphone processors

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Huawei ships 200,000 Mate X phones in first two months.
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Huawei is running out of the high-performance processors that power its best-selling smartphones, reports AP News. The brand’s main chip supplier stopped taking its orders after the U.S. issued new export controls on American technology. As a result, the mobile device company is unsure if production of its Kirin handsets CPUs will continue.

Huawei’s Nearly Depleted Chipset Inventory

Richard Yu, head of Huawei’s consumer business division, detailed his firm’s plight at the recent China Info 100 conference. The executive explained the company placed orders for components designed by its HiSilicon department in response to Washington’s mandate in May. Production on the brand’s outstanding purchases will conclude on September 15, and it is unable to requisition new parts.

Yu said the supply stoppage would prevent his company from making more premium smartphone processors and, consequently, high-end handsets.

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Although Yu did not name any specific vendors, his statement likely referred to the Taiwanese Semiconductor Manufacturing Company (TSMC). Despite being headquartered outside the U.S., Huawei processor supplier TSMC cut ties with the firm responsible for 15 percent of its revenue. As its Kirin chipsets require 7nm wafers, the smartphone company lost a crucial part of its supply chain.

San Diego-based chipmaker Qualcomm recently asked the White House for permission to sell components to Huawei, but the government has not officially replied. In the past, the U.S. Commerce Department gave Intel, Micron, and Xilinx license to do business with the Chinese electronics company. However, newly arisen Sino-American trade tensions suggest a near-term approval is unlikely.

Huawei’s Next Steps

In June, Nikkei Asian Review reported Huawei sought to make new chipset supply deals with Samsung and MediaTek. Since neither company is U.S.-based, they are not bound by the White House’s export control directive. However, none of the involved brands have announced a new supply deal as of this writing.

Huawei did make a deal with Shanghai Manufacturing International Corporation (SMIC) and Shanghai Microelectronics to secure a steady supply of handset components. While SMIC is China’s largest domestic semiconductor manufacturer, it lacks the resources to produce 7nm wafers. The firm partnered with its fellow Chinese chipmaker to address its deficiency, but that pact cannot help Huawei right away.

SMIC and Shanghai Microelectronics will need to develop a 7nm or equivalent process to make new Kirin CPUs. HiSilicon will have to adapt its chip designs to the specifications of its vendor’s products, which would likely delay the release of Huawei’s next-generation handsets.

In the second quarter, Huawei sold enough smartphones to become the world’s largest mobile device company. But if the brand does not have the resources to put out state-of-the-art hardware regularly, its market position will decline.

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