New US Tech Sanctions Threaten Huawei Smartphone and 5G Production
The US Department of Commerce prohibits suppliers from providing semiconductors made with US equipment to Huawei. This expanded restriction severely threatens Huawei's ability to manufacture smartphones and 5G base station chips moving forward.
The US Department of Commerce prohibits suppliers from providing semiconductor products made with US equipment and software to Huawei and its subsidiaries. Global market intelligence firm TrendForce reports that the full impact of these expanded sanctions on Huawei's smartphone and 5G base station manufacturing remains unclear. The company currently relies on existing inventory and a September 15 deadline to receive remaining components before the rules fully take effect.
If Huawei completely loses access to components containing US technology after this deadline, its 2021 smartphone production drops drastically to just 30 to 50 million units, down from 190 million in 2020. Competitors like Xiaomi, OPPO, and Vivo stand ready to absorb the majority of Huawei's lost market share. Even if suppliers eventually resume shipments, Huawei's 2021 smartphone output stays limited to just over 100 million units.
The sanctions also threaten Huawei's 5G base station operations, as the company depends on TSMC to manufacture its in-house Tiangang chips using 7-nanometer technology. If TSMC stops supplying these vital chips, Huawei faces direct disruptions to its 5G base station shipments and causes delays for Chinese mobile network operators. Although Huawei reduces its reliance on US radio frequency components by sourcing from Japanese firms like Murata and Sumitomo, the overall supply chain remains highly vulnerable to these restrictions.