China’s Huawei Technologies is poised to make a strong return to the 5G smartphone market by the end of this year, according to research firms. This marks a significant turnaround for the company, which saw its consumer electronics business suffer due to a US ban on equipment sales, According to Reuters.
Citing industry sources, including Huawei suppliers, three anonymous third-party technology research firms covering China’s smartphone sector revealed that Huawei should be able to acquire 5G chips domestically. The company will leverage its advancements in semiconductor design tools and collaborate with Semiconductor Manufacturing International Co (SMIC) for chip production.
While Huawei declined to comment, a revival in the 5G phone market would represent a victory for the company, which faced significant challenges for the past three years. In 2020, Huawei’s consumer business revenue reached its peak at 483 billion yuan ($67 billion) before experiencing a nearly 50% decline the following year.
Once a major contender alongside Apple and Samsung, Huawei’s access to chipmaking tools essential for its advanced models was severely curtailed by US restrictions starting in 2019. The US and European governments have raised concerns about Huawei’s security, an allegation the company denies. Consequently, Huawei could only sell limited quantities of 5G models using stockpiled chips.
As a result, Huawei’s global rankings plummeted last year, with the company primarily selling outdated 4G handsets. However, it managed to secure a 10% market share in China during the first quarter of this year, according to consultancy firm Canalys.
Research firms estimate that Huawei’s 5G shipments will range from 2 million to 4 million units, with one firm suggesting a yield rate of usable chips below 50%. Another firm predicted shipments could reach 10 million units without providing further details. In 2019, Huawei shipped 240.6 million smartphones globally, but its sales declined after selling its Honor unit, which accounted for a significant portion of its shipments that year.
Despite being cut off from Google’s Android operating system and developer services due to US restrictions, Huawei’s 5G comeback plans are supported by its breakthroughs in electronic design automation (EDA) tools for chip production. The research firms believe Huawei’s EDA software, combined with SMIC’s manufacturing process, could produce chips equivalent to 7 nm, commonly used in 5G phones.
Although Washington prevented SMIC from obtaining advanced chipmaking tools, there are indications that the company managed to produce 7 nm chips by modifying existing machines. Furthermore, Huawei has reportedly asked SMIC to produce chip components below 14 nm for 5G products this year.
However, the forecasted yield rate of less than 50% for 5G chips may result in higher costs. Analysts have raised concerns about the price competitiveness of such chips. Despite these challenges, Huawei remains determined to regain its position in the 5G smartphone market.
