Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure.
Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security.
Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US technology to produce components for Huawei.
Production of Kirin chips designed by Huawei’s own engineers would stop on Sept. 15 because they are made by contractors that need US manufacturing technology, said Richard Yu (余承東), president of the company’s consumer unit.
Huawei lacks the ability to make its own chips, he said.
“This is a very big loss for us,” Yu said on Friday at the China Info 100 industry conference, according to a video recording of his comments posted on multiple Web sites.
“Unfortunately, in the second round of US sanctions, our chip producers only accepted orders until May 15. Production will close on Sept. 15,” Yu said. “This year may be the last generation of Huawei Kirin high-end chips.”
More broadly, Huawei’s smartphone production has “no chips and no supply,” Yu said.
Yu said this year’s smartphone sales probably would be lower than last year’s level of 240 million handsets, but gave no details.
Huawei has denied accusations that it might facilitate Chinese spying.
Chinese officials have accused Washington of using national security as an excuse to stop a competitor to US tech industries.
Huawei is a leader among emerging Chinese competitors in telecoms, electric vehicles, renewable energy and other fields. The company has 180,000 employees and one of the world’s biggest research and development budgets at more than US$15 billion a year.
However, like most global tech brands, it relies on contractors to manufacture its products.
Earlier, Huawei announced that its global sales in the first half of this year rose 13.1 percent from a year earlier to 454 billion yuan (US$65 billion).
That was due to strong sales of high-end products, Yu said.
Huawei became the world’s top-selling smartphone brand in the three months ending in June, passing rival Samsung Electronics Co for the first time due to strong demand in China, according to Canalys.
Sales abroad fell 27 percent from a year earlier.
Separately, Qualcomm Inc has been putting pressure on US President Donald Trump’s administration to allow it to sell components to Huawei, saying that the restrictions risk channeling revenue to foreign competitors rather than preventing the Chinese company from obtaining the parts, the Wall Street Journal reported on Friday.
The US chipmaker is lobbying to be permitted to sell chips to Huawei that would be used in 5G smartphones, the newspaper reported, citing a presentation it says has been “circulating around Washington” and without specifying how it obtained the document.
US chipmakers are required to obtain a license from the US Department of Commerce to ship certain components to Huawei.
Qualcomm said that, due to the restrictions, its foreign competitors now have access to a market worth as much as US$8 billion each year.
It cited MediaTek Inc (聯發科) and Samsung as those benefiting from the redirected revenue stream.
MediaTek said its investment in 5G technology has allowed it to win customers globally. It declined to identify specific companies.
Additional reporting by Bloomberg
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