Huawei recently reassured its Chinese telecom partners it has sufficient inventory to continue supplying them with 5G base station chipsets through 2021. The conglomerate stockpiled the 7nm processors that power its networking gear before losing access to the technology last month. As the region’s wireless carriers will spend $170 billion on their 5G rollout, the project will be a major revenue driver for the telecom.
Huawei also launched its Mate 40 smartphone series, which might be its last line of cutting-edge handsets.
Huawei’s 5G Base Station Semiconductor Stockpile
In May, the U.S. Commerce Department announced it would enact new export controls this September on American-derived semiconductor technology. Taiwanese Semiconductor Manufacturing Company (TSMC) abided by Washington’s new rules to avoid large fines and cut ties with its former client once the new rules came into effect.
Huawei reacted to the situation by placing several bulk orders with TSMC, including one for millions of Tiangang processors.
Designed by the conglomerate’s HiSilicon subsidiary, the 5G base station chipsets are made using TSMC’s well-regarded 7nm process. The firm won several supply contracts in China because of the quality of its Tiangang central processing units (CPUs).
Ultimately, TSMC reportedly delivered over 2 million 5G networking CPUs to Huawei before the deadline.
According to Bloomberg, Huawei informed its wireless carrier customers it could provide them with Tiangang chips through 2021. The firm’s stockpile will enable it to keep a significant revenue stream going while it attempts to break into new industries. That said, the corporation’s ability to sustain its core smartphone business is more ambiguous.
Huawei’s Last Premium Handset?
In addition to stockpiling Tiangang CPUs, Huawei also tried to accumulate large quantities of Kirin 9000 mobile chipset ahead of the new regulations coming into effect. That order enabled the conglomerate to launch its Mate 40 smartphone on Thursday, but the occasion is bittersweet. Right now, it seems like the line may be the last state-of-the-art handset line the firm releases.
Like the Tiangang series, the Kirin 9000 was designed by HiSilicon. But the latter components are 5nm chipsets that feature 8 CPU cores and 24 graphics processing units (GPUs). Because of those robust technical specifications, the Mate 40 line has received praise for its outstanding performance.
Since Huawei can no longer order new Kirin 9000 chips, the device may have constrained availability. The firm shipped 5 million units of the Mate 30, its prior generation flagship, within 60 days of launch. If the company sees similar demand for the Mate 40, the handset could be sold out by year’s end.
Richard Yu, head of Huawei consumer business division, also revealed his employer could not develop new premium smartphones due to supply constraints.
Nevertheless, the corporation has shown it can effectively react to significant changes. While it may not be a leading smartphone provider for much longer, it should be able to generate billions of dollars in the long-term. With that new capital, Huawei will have the resources to execute a pivot into new sectors.