Huawei to pack less of a punch in the new year after bruising 2020

Platform News: Huawei Technologies

Huawei this year will probably see slower 5G business and push farther into software, while trusting its smartphones get a reprieve from US sanctions which last year broke the chip-reliant heart of its group, analysts said.

Restricted access to high-end semiconductors means rationing during China’s network upgrade, they said, while the dissection of its mobile arm will send Huawei Technologies upside down positions while it continues to develop a proprietary operating system.

China’s leading telecommunications gear manufacturer found itself on a US trade blacklist in May 2019 due to national security issues. Huawei has repeatedly denied it’s a risk.

That effectively prohibited US-based companies from purchasing Huawei essential US technology. Last August, the ban has been extended to foreign companies with US company, attaining chief suppliers like Taiwan Semiconductor Manufacturing Co Ltd (TSMC).

The shift hit an Achilles heel since Huawei is determined by TSMC to make advanced processors for its handsets, fifth-generation (5G) network base stations, servers, cloud based computing and artificial intelligence goods, stated Paul Triolo, head of global tech policy in Eurasia Group. Stockpiles just last so long, he said.

“Passage of this death sentence does not involve a swift execution,” technology analyst Dan Wang said in a client note.

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Wang said Huawei will feel the impact most acutely in its consumer business, which brought in 54% of revenue in 2019.

In November, Huawei spun off budget smartphone line Honor at a sale founder Ren Zhengfei stated would allow the brand to regain access to chips. Huawei could look to do the same with its premium lines this year, Triolo stated.

Huawei was the planet’s largest smartphone manufacturer as recent as the next quarter of 2020, but the Honor sale and chip shortage will likely take it out of the top six this season, said information firm Trendforce.

Its fortune may vary with the US presidential inauguration of Joe Biden, from whom analysts anticipate more leniency towards Huawei’s smartphone business.

In the meantime, Huawei will likely revolve around the Harmony operating system it’s developing for its smartphones after being cut off from Alphabet Inc’s Android, stated Nicole Peng, VP of Mobility at consultancy Canalys.

Elsewhere in applications, Huawei will probably trickle more towards services such as cloud computing and internet-of-things apparatus, although these are unlikely to offset slowdown in smartphones and telecommunication infrastructure, analysts said.

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Huawei’s network business does have bright prospects, but with major markets such as Britain and Japan banning its equipment, it will likely concentrate on China, analysts said.

The business has enough chips to create around 500,000 5G base stations, stated Jefferies analyst Edison Lee. Yet rather than consume that provide, the government will probably slow 5G introduction, taking “a middle-of-the-road approach to balance between expanding coverage and waiting for Huawei to catch up,” he explained.

The team at Platform Executive hope you have enjoyed the ‘Huawei to pack less of a punch in the new year after bruising 2020‘ article. Initial reporting via our official content partners at Thomson Reuters. Reporting by David Kirton. Editing by Christopher Cushing.

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