On November 5, Qualcomm released its 2020 Q4 financial report and full-year financial report. On the same day, Qualcomm CEO Steve Mollenkopf said that Qualcomm has applied to the US government for a license to sell chips to Huawei, but the application has not received any response.
Leaving aside how Qualcomm’s performance has performed – this is not the focus of the author’s discussion – let’s talk about what we should know behind Qualcomm’s application to sell chips to Huawei.
The picture comes from OFweek Weike.com
Huawei Core Broken Crisis
Let’s take a look at Huawei’s core breaking crisis.
Since the final escalation of the US ban on Huawei on September 15, 2020, Huawei has faced an increasingly difficult “coreless” dilemma.
On the same day, the Bureau of Industry and Security (BIS) under the U.S. Department of Commerce added 38 Huawei-affiliated companies to its original “entity list”, revised some entity list entries, and expanded the scope of license requirements.
The Commerce Department said the new measures, which take effect immediately, are believed to be aimed at thwarting Huawei’s efforts to circumvent U.S. export controls. Reuters quoted a Commerce Department official as saying the Commerce Department made it clear that they were covering Huawei’s possible attempts to buy off-the-shelf designs from third-party design firms. (For details, please refer to the analysis article “After the United States blocked the increase, Huawei’s “coreless” predicament was further aggravated”)
Affected by this, Huawei’s channel for purchasing chips from high-energy, MediaTek and other manufacturers to replace the missing Kirin has been blocked from the perspective of mobile phone SoC chips. Even the supply of accessories such as memory chips and camera sensors has caused troubles for Samsung, SK Hynix, Micron, Sony and other manufacturers to cut off supply to Huawei.
Not only the mobile phone business, but also TV and PC chips in Huawei’s consumer business, base station chips in the operator’s business, etc., doubts about their stable supply have also increased.
Fortunately, the news that Intel, AMD and other companies’ applications to supply Huawei were approved later, which relieved some of the pressure on Huawei. There are media reports that the U.S. Department of Commerce wants to limit Huawei’s scope to 5G-related businesses. According to a report by the Financial Times at the end of October, the U.S. official said that as long as chips are not used for Huawei’s 5G business, it will allow More and more chip companies are supplying components to Huawei.
The report quoted a semiconductor executive involved as saying, “The U.S. Department of Commerce has been telling companies in recent conversations that although supply licenses to Huawei are for the purpose of refusing, if it can be proved that the relevant technology does not support 5G, This can be overcome.”
In addition, executives at two Asian semiconductor companies expressed optimism about restoring supplies to Huawei. “The US has shown us that chips used in mobile devices are not a problem,” said one of them.
If so, it would be great news for Huawei to breathe a sigh of relief. However, the news has not been confirmed, and it remains to be seen how.
Selling the Honor mobile phone business to survive?
The lack of core pressure, focusing on the shortage of mobile phone SoC chips, has made Huawei’s mobile phone business precarious.
So far, perhaps the most serious impact in this regard has been the widely circulated rumors of “sale of glory” in mid-October.
On October 14, according to a report by Reuters, citing sources, Huawei is negotiating with Digital China and other bidders to seek to sell part of the Honor mobile phone business. The transaction price is said to be as high as $3.7 billion (about 25 billion yuan). RMB). It is reported that the sale may include the Honor brand, research and development capabilities and related supply chain management business. Alleged bidders include Digital China, TCL and Xiaomi.
Before the Reuters report, well-known industry V-Tianfeng Securities analyst Ming-Chi Kuo analyzed in his latest report that Huawei may sell the Honor mobile phone business for reasons such as evading U.S. sanctions and recovering funds.
Selling the Honor mobile phone business makes sense at least logically. In theory, it will help Huawei focus on its high-end Huawei-branded mobile phone business, which is obviously less profitable for Huawei. Guo Mingchi said that the sale of the Honor mobile phone business will be a win-win for Honor suppliers and China’s electronics industry. (For a detailed analysis, please jump to the article “Selling Glory, a key sign of Huawei’s strategic retreat?” to view)
Of course, even if the Honor mobile phone business is really sold, Huawei’s core shortage dilemma will not be fundamentally resolved. Removing the pressure of allocating limited chip resources to Honor can only have the effect of throttling (plus financial recovery of funds). To solve Huawei’s predicament, solving the problem of chip sources is fundamental.
Build your own production line to produce chips?
According to the British “Financial Times” report on November 2, Huawei is studying and formulating a plan to establish a chip factory in Shanghai without using US technology, so that Huawei can also focus on the telecom infrastructure business under US sanctions. parts supply. (The first report that Huawei intends to build a chip production line should be a report by Caixin Weekly on October 26: “Huawei: The Long March After Suspension”.)
The report, citing two “informed sources,” said the factory would be run by Huawei’s partner, the Shanghai Integrated Circuit Research and Development Center, a chip research firm backed by the Shanghai government whose main shareholder is state-owned Hua Hong. Group, Hua Hong also owns foundry chip manufacturers – Hua Hong Grace and Shanghai Huali.
The report also said that the planned chip factory will initially trial production of low-end 45nm chips, while Huawei hopes to start producing 28nm chips by the end of next year. This will allow Huawei to secure the operation of its smart TV and some IoT device/product businesses.
Looking further ahead, Huawei aims to produce 20nm chips by the end of 2022. If it can do that, then most of Huawei’s 5G telecom equipment business can be maintained. However, this plan seems to be difficult to help the mobile phone business, because mobile phone SoC chips often need to be produced using the most advanced process technology, and the competition is particularly fierce.
“A semiconductor industry executive who heard the plan” said: If this project is successful, coupled with Huawei’s stockpiles of chips that may be enough for two years, it can become Huawei’s “infrastructure business leading to sustainable development”. A bridge to the future.”
Mark Li, a semiconductor industry analyst at Bernstein in Hong Kong, also said: “They may be able to do it in two years.”
The Financial Times also quoted a chip industry executive as saying that Huawei is already investing in Chinese domestic semiconductor companies, especially smaller ones.
Guo Ping, Huawei’s rotating chairman, said in September: “Huawei has strong chip design capabilities, and is willing to help trusted supply chains enhance their chip manufacturing, equipment, and materials capabilities. Helping them is also helping us.”
The report, citing chip engineers and industry executives, said Huawei’s eventual plan is to use entirely Chinese-made equipment on its domestic production lines. “Such a chip factory is likely to use a combination of equipment from multiple Chinese suppliers, such as China Micro and North China Creation, as well as some second-hand foreign tools they can find in the market,” said Bernstein’s Mark Li. He also added that making chips in such an environment would be less efficient and more expensive. But the number of semiconductors required for base stations is far lower than mass products such as smartphones, so Huawei can afford it.
Related interesting topics
Let’s go back to the topic that Qualcomm said “has applied to the US government for a license to sell chips to Huawei”. Does it really mean that Huawei’s mobile phone business is revived?
Seeing this news, the author also recalled a news from October 16, when the media headline was “Huawei may indefinitely suspend payment of $1.8 billion in patent fees to Qualcomm”, and its report was as follows: ” It is reported that the long-term patent cooperation agreement reached between Huawei and Qualcomm has not yet been implemented. Because Qualcomm has not resumed the supply of chips to Huawei, Huawei has suspended the payment of the $1.8 billion patent fee to Qualcomm. Some industry sources said that Huawei has This is to put pressure on Qualcomm to obtain chip supply, if Qualcomm is still unable to supply Huawei, Huawei’s payment of this patent fee may be suspended indefinitely.”
Time has come to today, that is, on November 5th, in addition to the news of Qualcomm’s application to sell chips to Huawei, there is also an article titled “Qualcomm Confirms: Huawei has received a one-time payment of 1.8 billion US dollars.”
This is interesting. One is that Huawei has suspended payment indefinitely because it has not resumed the supply of chips, and the other is that Qualcomm has confirmed that it has received the payment. Whether there is enough interesting content behind it, I will leave it to the readers to savour…
On November 5, Qualcomm released its 2020 Q4 financial report and full-year financial report. On the same day, Qualcomm CEO Steve Mollenkopf said that Qualcomm has applied to the US government for a license to sell chips to Huawei, but the application has not received any response.
Leaving aside how Qualcomm’s performance has performed – this is not the focus of the author’s discussion – let’s talk about what we should know behind Qualcomm’s application to sell chips to Huawei.
The picture comes from OFweek Weike.com
Huawei Core Broken Crisis
Let’s take a look at Huawei’s core breaking crisis.
Since the final escalation of the US ban on Huawei on September 15, 2020, Huawei has faced an increasingly difficult “coreless” dilemma.
On the same day, the Bureau of Industry and Security (BIS) under the U.S. Department of Commerce added 38 Huawei-affiliated companies to its original “entity list”, revised some entity list entries, and expanded the scope of license requirements.
The Commerce Department said the new measures, which take effect immediately, are believed to be aimed at thwarting Huawei’s efforts to circumvent U.S. export controls. Reuters quoted a Commerce Department official as saying the Commerce Department made it clear that they were covering Huawei’s possible attempts to buy off-the-shelf designs from third-party design firms. (For details, please refer to the analysis article “After the United States blocked the increase, Huawei’s “coreless” predicament was further aggravated”)
Affected by this, Huawei’s channel for purchasing chips from high-energy, MediaTek and other manufacturers to replace the missing Kirin has been blocked from the perspective of mobile phone SoC chips. Even the supply of accessories such as memory chips and camera sensors has caused troubles for Samsung, SK Hynix, Micron, Sony and other manufacturers to cut off supply to Huawei.
Not only the mobile phone business, but also TV and PC chips in Huawei’s consumer business, base station chips in the operator’s business, etc., doubts about their stable supply have also increased.
Fortunately, the news that Intel, AMD and other companies’ applications to supply Huawei were approved later, which relieved some of the pressure on Huawei. There are media reports that the U.S. Department of Commerce wants to limit Huawei’s scope to 5G-related businesses. According to a report by the Financial Times at the end of October, the U.S. official said that as long as chips are not used for Huawei’s 5G business, it will allow More and more chip companies are supplying components to Huawei.
The report quoted a semiconductor executive involved as saying, “The U.S. Department of Commerce has been telling companies in recent conversations that although supply licenses to Huawei are for the purpose of refusing, if it can be proved that the relevant technology does not support 5G, This can be overcome.”
In addition, executives at two Asian semiconductor companies expressed optimism about restoring supplies to Huawei. “The US has shown us that chips used in mobile devices are not a problem,” said one of them.
If so, it would be great news for Huawei to breathe a sigh of relief. However, the news has not been confirmed, and it remains to be seen how.
Selling the Honor mobile phone business to survive?
The lack of core pressure, focusing on the shortage of mobile phone SoC chips, has made Huawei’s mobile phone business precarious.
So far, perhaps the most serious impact in this regard has been the widely circulated rumors of “sale of glory” in mid-October.
On October 14, according to a report by Reuters, citing sources, Huawei is negotiating with Digital China and other bidders to seek to sell part of the Honor mobile phone business. The transaction price is said to be as high as $3.7 billion (about 25 billion yuan). RMB). It is reported that the sale may include the Honor brand, research and development capabilities and related supply chain management business. Alleged bidders include Digital China, TCL and Xiaomi.
Before the Reuters report, well-known industry V-Tianfeng Securities analyst Ming-Chi Kuo analyzed in his latest report that Huawei may sell the Honor mobile phone business for reasons such as evading U.S. sanctions and recovering funds.
Selling the Honor mobile phone business makes sense at least logically. In theory, it will help Huawei focus on its high-end Huawei-branded mobile phone business, which is obviously less profitable for Huawei. Guo Mingchi said that the sale of the Honor mobile phone business will be a win-win for Honor suppliers and China’s electronics industry. (For a detailed analysis, please jump to the article “Selling Glory, a key sign of Huawei’s strategic retreat?” to view)
Of course, even if the Honor mobile phone business is really sold, Huawei’s core shortage dilemma will not be fundamentally resolved. Removing the pressure of allocating limited chip resources to Honor can only have the effect of throttling (plus financial recovery of funds). To solve Huawei’s predicament, solving the problem of chip sources is fundamental.
Build your own production line to produce chips?
According to the British “Financial Times” report on November 2, Huawei is studying and formulating a plan to establish a chip factory in Shanghai without using US technology, so that Huawei can also focus on the telecom infrastructure business under US sanctions. parts supply. (The first report that Huawei intends to build a chip production line should be a report by Caixin Weekly on October 26: “Huawei: The Long March After Suspension”.)
The report, citing two “informed sources,” said the factory would be run by Huawei’s partner, the Shanghai Integrated Circuit Research and Development Center, a chip research firm backed by the Shanghai government whose main shareholder is state-owned Hua Hong. Group, Hua Hong also owns foundry chip manufacturers – Hua Hong Grace and Shanghai Huali.
The report also said that the planned chip factory will initially trial production of low-end 45nm chips, while Huawei hopes to start producing 28nm chips by the end of next year. This will allow Huawei to secure the operation of its smart TV and some IoT device/product businesses.
Looking further ahead, Huawei aims to produce 20nm chips by the end of 2022. If it can do that, then most of Huawei’s 5G telecom equipment business can be maintained. However, this plan seems to be difficult to help the mobile phone business, because mobile phone SoC chips often need to be produced using the most advanced process technology, and the competition is particularly fierce.
“A semiconductor industry executive who heard the plan” said: If this project is successful, coupled with Huawei’s stockpiles of chips that may be enough for two years, it can become Huawei’s “infrastructure business leading to sustainable development”. A bridge to the future.”
Mark Li, a semiconductor industry analyst at Bernstein in Hong Kong, also said: “They may be able to do it in two years.”
The Financial Times also quoted a chip industry executive as saying that Huawei is already investing in Chinese domestic semiconductor companies, especially smaller ones.
Guo Ping, Huawei’s rotating chairman, said in September: “Huawei has strong chip design capabilities, and is willing to help trusted supply chains enhance their chip manufacturing, equipment, and materials capabilities. Helping them is also helping us.”
The report, citing chip engineers and industry executives, said Huawei’s eventual plan is to use entirely Chinese-made equipment on its domestic production lines. “Such a chip factory is likely to use a combination of equipment from multiple Chinese suppliers, such as China Micro and North China Creation, as well as some second-hand foreign tools they can find in the market,” said Bernstein’s Mark Li. He also added that making chips in such an environment would be less efficient and more expensive. But the number of semiconductors required for base stations is far lower than mass products such as smartphones, so Huawei can afford it.
Related interesting topics
Let’s go back to the topic that Qualcomm said “has applied to the US government for a license to sell chips to Huawei”. Does it really mean that Huawei’s mobile phone business is revived?
Seeing this news, the author also recalled a news from October 16, when the media headline was “Huawei may indefinitely suspend payment of $1.8 billion in patent fees to Qualcomm”, and its report was as follows: ” It is reported that the long-term patent cooperation agreement reached between Huawei and Qualcomm has not yet been implemented. Because Qualcomm has not resumed the supply of chips to Huawei, Huawei has suspended the payment of the $1.8 billion patent fee to Qualcomm. Some industry sources said that Huawei has This is to put pressure on Qualcomm to obtain chip supply, if Qualcomm is still unable to supply Huawei, Huawei’s payment of this patent fee may be suspended indefinitely.”
Time has come to today, that is, on November 5th, in addition to the news of Qualcomm’s application to sell chips to Huawei, there is also an article titled “Qualcomm Confirms: Huawei has received a one-time payment of 1.8 billion US dollars.”
This is interesting. One is that Huawei has suspended payment indefinitely because it has not resumed the supply of chips, and the other is that Qualcomm has confirmed that it has received the payment. Whether there is enough interesting content behind it, I will leave it to the readers to savour…
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