Huawei admits US sanctions have hit its smartphone business hard

At a recent conference the head of Huawei’s consumer unit revealed that supplies of its smartphone processors have dried up.

The news comes courtesy of AP, which reports on Richard Yu’s appearance at the China Info 100 tech conference. Huawei designs its own SoCs for its smartphones under the Kirin brand. It doesn’t have any chip manufacturing capability of its own, however, and so is reliant on contract manufacturers such as TSMC, which recently confirmed it is no longer taking orders from Huawei.

“This is a very big loss for us,” Yu apparently said. “Unfortunately, in the second round of U.S. sanctions, our chip producers only accepted orders until May 15. Production will close on Sept. 15. This year may be the last generation of Huawei Kirin high-end chips.” He concluded that Huawei’s smartphone production has no chips and no supply.

So, on the surface that would appear to be game over for Huawei’s smartphone business, at least at the high end, for the foreseeable future. Yu reportedly said this year’s smartphone shipment numbers would decline, but that in itself is no surprise and its channel will have been fully stocked for the year so far.

2021, however, could be a complete car crash. If Huawei can’t manufacture its own smartphone chips then its only alternative would be to buy them from someone else. The obvious choice would be Qualcomm, but since it’s American that’s presumably a non-starter. Mediatek would be an option in the sub-premium tiers, but they probably use US IP too. So, as things stand, much of Huawei’s smartphone business is set to disappear next year.