In early August, Richard Yu, Huawei’s Executive Director and CEO of the Consumer Business Group, made a bold proclamation that reverberated: “Huawei’s flagship smartphones are making a comeback.” This proclamation has sparked speculation about the imminent return of Huawei to the 5G smartphone market.
Adding to this, industry sources quoted by Chinese media previously hinted that Huawei’s 5G smartphones could potentially start shipping towards the conclusion of 2023, with a tentative early launch window in October. These various cues collectively hint at the nearing possibility of Huawei’s resurgence in the 5G smartphone arena.
Recently Chinese media have unveiled intriguing developments: a particular entity is presently in the process of testing 5G baseband chips and System-on-Chip (SoC) solutions. These SoCs are designed to offer performance slightly below flagship levels and are anticipated to be integrated into a top-tier handset. There is strong speculation that this testing entity is none other than Huawei.
Conversely, during Qualcomm’s most recent earnings conference call, the company’s leadership clarified that they have yet to receive authorization to supply 5G chips to Huawei. This suggests that, in the foreseeable future, any revenue derived from selling 5G chips to Huawei is likely to remain non-existent.
This affirmation from Qualcomm aligns with earlier statements made by Huawei’s Richard Yu to the publication First Financial, where he noted that Qualcomm had not resumed supplying 5G chips to Huawei.
With external chip procurement no longer viable, Huawei finds itself compelled to achieve self-sufficiency. Since July, reports from outlets like Reuters and Nikkei, citing anonymous research institutions, have been highlighting a potential partnership between Huawei and SMIC for chip development. This amplifies the growing whispers of Huawei’s imminent reentry into the 5G smartphone market.
Strategic Implications of Huawei’s 5G Modem Chip Testing
With the latest news regarding Huawei’s testing of 5G modem chips and SoCs, these developments serve to validate the prevailing speculation that Huawei is indeed gearing up to make a comeback in the 5G smartphone sector.
Cast your mind back to September 2019, when Huawei took the wraps off its flagship Kirin 990 5G chip at IFA. This System-on-Chip was manufactured using TSMC’s 7nm process and featured an integrated 5G modem chip named Balong.
As Huawei positions itself for a return to the 5G smartphone market and the prospect of procuring Qualcomm chips remains elusive, the question arises of whether Huawei will reintroduce Kirin SoCs or opt to separately integrate 5G Balong modem chips alongside Application Processors (APs). While Huawei’s subsidiary HiSilicon remains strong in IC design, the company’s production dependency lies squarely on SMIC.
It’s essential to highlight that, given SMIC’s yield rate and production capacity at the 7nm node, industry projections peg Huawei’s potential 5G smartphone shipments at a range of 2 to 3 million units.
Nonetheless, should Huawei surmount the hurdles posed by the Chinese supply chain and effectively reintroduce 5G smartphones to the market, the strategic impact of this feat could potentially eclipse the significance of selling millions of 5G smartphones.
Conclusion
Richard Yu‘s proclamation sparked speculation about Huawei’s return to the 5G smartphone market. Industry sources hinted at late 2023 shipping. Recent reports suggest Huawei is testing 5G chips. Qualcomm’s inability to supply aligns with previous statements. Huawei’s self-sufficiency aims grow with possible SMIC partnership. As Huawei ventures into the 5G smartphone market, its strategic impact could surpass sales volume.
