Rivals of Chinese telecom Huawei significantly increased their electronic components orders from Japanese chipmakers in September, reported Caixin. Xiaomi, Oppo, and Vivo intend to ramp up smartphone production next year to take advantage of their competitor’s sourcing problems.
Last month, the U.S. Commerce Department issued new export controls that block Huawei’s access to certain American derived semiconductor technology. As a result, the Sino region’s leading mobile phone provider revealed it is running out of handset parts.
Caixin also notes Japan’s components manufacturers have seen a jump in business because of U.S. trade policy-related concerns.
Seizing the Opportunity
In anticipation of Washington restricting its access to American technology, Huawei hoarded electronics components in the first half of 2020. But because the conglomerate could only buy so many chips, it anticipates a 20 percent decline in smartphone manufacturing next year.
The firm’s rivals interpreted that development as an opportunity to increase their share of the Sino handset market.
Xiaomi and Oppo reportedly intend to produce 220 million mobile devices each in 2021. The two providers’ plans represent an over 50 percent year-over-year increase in smartphone production. The two corporations have increased their orders with Japanese electronics manufacturers to meet their output quotas.
One unnamed Japanese chip manufacturer told Caixin they received a record number of orders in September. TDK Corporation also said the newfound demand they have experienced recently topped the interest they previously had from Huawei.
Trade Ban Anxiety Drives Japanese Sale
Certain Japanese chipmakers have also reportedly seen a surge in business due to the expansion of U.S. government export restrictions.
In recent years, Washington updated its trade policies to keep American technology out of the hands of Huawei and Semiconductor Manufacturing International Corporation (SMIC). Consequently, Sino device makers are anxious that the U.S. government will make other policy changes that will impact their supply chains.
To prevent future disruption, Chinese smartphone manufacturers have amplified their part orders from Japanese chipmakers that use locally made equipment.
Renesas Electronics received a request from a Sino corporation to make a non-American version of a crucial component. Similarly, Zuken, a printed circuit board design firm, has seen a spike in orders for Chinese companies interested in alternatives to chip-making tools that are not dependent on U.S. innovations.
That said, the wave of Sino manufacturers seeking Japanese manufactured components has not benefited all of Nippon’s chipmakers.
Sony and Koixia utilize American tech throughout their respective production lines and cannot quickly shift to using alternate tools. Because of that, neither vendor has experienced an upswing in demand from Chinese device manufacturers.
One Japanese chipmaker said the order increase local suppliers have seen from China is temporary and would fade next year. But if leading Sino smartphone manufacturers decide to procure their parts from Japan, the bump will be permanent.