Huawei Positioning Itself To Make A Comeback In The Smartphone Space With 5G Devices Sporting Domestically-Made Chips

Due to the number of sanctions placed on Huawei, such as being unable to run Google services on any of its smartphones and tablets, the Chinese firm was only limited to selling its devices in China. However, according to the latest report, the company is planning a comeback when it comes to selling 5G phones, with these handsets apparently sporting domestically-made chips.

Huawei will use its own semiconductor design tools, along with the help of SMIC, to bring 5G phones to different markets

With the plethora of restrictions placed on Huawei, it cannot sell 5G phones through the use of Qualcomm’s or MediaTek’s chips. Instead, Reuters reports that the company will be able to procure 5G chips through its own advanced tools, plus enlisting the help of Semiconductor Manufacturing International Co, or SMIC. Currently, the Chinese firm is stuck selling last-generation smartphones sporting 4G modems, which negatively impacted its business because, at one stage, it was challenging the supremacy of both Samsung and Apple.

One research firm stated that Huawei was expected to take advantage of SMIC’s N+1 manufacturing process. However, things are not as positive as they might appear to be behind the curtain because the forecasted yield rate of these chips is below 50 percent, meaning that 5G chip shipments are going to be limited. According to the report, only 2-4 million units could be shipped for the calendar year, though a second research firm believes that estimated shipments could top out at 10 million units.

For those wondering, SMIC’s N+1 manufacturing process is equivalent to making chips at the 7nm technology, which is behind TSMC’s 3nm process, but it is still some progress, especially seeing as how many reported Huawei was in ‘survival mode.’ The U.S. had also restricted SMIC to the extent that it could not purchase advanced chipmaking tools from Dutch manufacturer ASML for mass producing 7nm chips. Fortunately, the company has apparently scaled this major obstacle by tweaking simpler DUV machines.

Chip researcher Doug Fuller believes that due to the 50 percent yield rate, the 5G chips that Huawei intends to procure will be expensive, and the company will have to eat up its margins as it attempts to regain its lost position in the smartphone market. When SMIC starts producing 5G chips at scale, Huawei should be able to improve those margins in the future, but for the time being, there are limitations as to what it can achieve. Regardless, there is a silver lining in all of this, and with competition appearing a little stale, Huawei’s revival is exactly what the industry requires now.

Written by Omar Sohail