When all the doors seemed to have closed for Huawei, the US government suddenly threw a life-saving buoy. AMD and Intel, the US chip giants, became the first company to be allowed to “do business” with Huawei by the US Commerce Department.
It was not until the last year of Trump’s four-year term that the weapon to eradicate Huawei gradually came to light by forcing all companies around the globe to seek U.S. permission when selling chips to Huawei. So, why when the absolute victory was imminent, Mr. Trump suddenly held back?
There is no need to annihilate
Without “uprooting”, the United States can still eliminate Chinese companies from important positions in the global hi-tech industry.
In fact, Huawei is not the first Chinese company to be held by the United States. In 2013, another major Chinese telecommunications company, ZTE, was also put on the list by President Obama. Like Huawei, ZTE is also subject to increasingly heavy controls and just a year later it no longer holds its position in the top 5 smartphone brands.
Google’s Android ban and the ban on buying chips using US technology have done the same harm to Huawei. Having lost access to Android with Google Play, YouTube and other Google services, Huawei has completely lost momentum in international markets. However, this indirectly helped Huawei dominate the home market (and thus, occupying the No. 1 global spot), a chip-buying ban in May will also block the Chinese giant’s future path of life. As of September 15 – the day companies have to stop selling chips to Huawei, the company has barely managed to stock up on 8.8 million units of Kirin chips for the upcoming Mate 40 series.
Even many Huawei smartphones are now in a shortage and / or out of available colors. The supply chain claims Huawei is even willing to buy “just out of the oven” chip that has not yet undergone quality testing. Ming Chi-Kuo, a well-known market analyst, said that Huawei could give up the smartphone business to use the meager remaining chips for more essential purposes – 5G infrastructure and servers.
The hit from Mr. Trump was strong enough for Huawei to soon fall to other competitors.
These signals mean that, Huawei’s manufacturing capabilities have really suffocated by the US ban. In the upcoming fourth quarter and in the whole year 2021, the strong power of Apple, Samsung, Xiaomi, OPPO / Vivo … will not diminish when these firms still have the right to design and use new chips. strongest, strongest. From its No. 1 position in the world, Huawei may soon become an underdog name.
AMD and Intel are not TSMC
If he did not have to destroy Huawei, Trump needs to think about the other goal: to secure the interests of American companies. Since being blacklisted, Huawei has claimed that it pays up to $ 11 billion a year for US companies. If the Chinese giant had sure Fall, America can think about recovering a portion of this revenue.
So, why choose AMD and Intel?
AMD fully converges factors to become a strategic card in the battle between Trump and Huawei.
The first reason is because both are American companies. So the Trump administration can influence AMD or Intel more easily than Samsung or TSMC (Taiwan), for example. While still opening a path for Huawei to live (pretend), the message from the United States is very clear: this way of life is controlled by the US and can be severed at any time.
Few people see a second, equally important reason: unlike TSMC, AMD and Intel are not outsourcing companies. That means Trump is still cutting off Huawei’s ability to design chips himself. There is no way that Huawei designs the chips by themselves and orders them from AMD and Intel.
Instead, Huawei will have to buy chips that are wholly controlled by the two US giants. The amount of Chinese brain ownership per chip will decrease, dependence on Americans will increase. If Huawei could use Kirin in the past to realize its own vision of AI or graphics, now Huawei / Honor smartphones will have to accept all the technology limitations found on Intel and AMD chips.
The heart of Huawei’s devices will be a chip controlled by the United States.
America’s balance of power
Last and perhaps most important: It has been many years since Intel and AMD produced chips according to the ARM architecture, which is the core architecture of smartphones, tablets and many other personal computing devices. Using x86 chips (the most common architectures of AMD and Intel chips) for smartphones is not impossible, but it will take two US companies at least a year to create a chip suitable for mobile devices. . In the near future, Huawei is forced to depend on the number of chips purchased in a hurry recently. Quality problems are likely to happen, and Huawei phones will lag significantly behind the competition.
Even in the case that Intel / AMD can successfully manufacture mobile chips for future Huawei P or Honor smartphones, this chip will certainly be much inferior to Qualcomm, Exynos or MediaTek chips. the same year. Once again, the fact that Huawei lags behind Apple, Samsung and its Chinese counterparts in the smartphone war is inevitable.
However, AMD and Intel are also Huawei’s ONLY options at the moment. Some sources also claim that since only AMD and Intel are licensed, Huawei must count switch to selling PCs and monitors. This is going to be an uphill battle: unlike Huawei smartphones, PCs and monitors only a very, very small part of the Chinese and global market. Not to mention, PCs and monitors also have very low sales and profits, while smartphone sales have consistently reached 1.5 billion units over the years.
Certainly switching to AMD will be a step backward for Huawei, but the Chinese giant has no other option.
As you may have noticed, in every respect, Trump’s move is a balance between two opposing factors: punishing Huawei heavily enough but at the same time retaining benefits for American companies. Huawei has the right to continue living, but sooner or later this Chinese giant will also shrink to a small dot in the smartphone war.