Huawei may have to exit smartphone business if restrictions persist

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By the look of things, the leash is tightening on Huawei courtesy the US Trade sanctions, which is making it difficult for the Chinese multinational technology company to sustain its smartphone business. First came the ban on using Google Android OS triggered by the last year’s decision by the US authorities to put Huawei on Entity List. This put a roadblock when it came to American Technologies having any business ties with the Chinese company.

The situation has even worsened as the Chinese giant cannot use the semiconductor technologies by American companies. This indirectly stops them from using technological assistance from American companies even for manufacturing their in-house Kirin chipsets. Nor can they source chipsets from industry leaders like Qualcomm or MediaTek. In fact, MediaTek is the only company that has applied for permission from the US government to conduct business with Huawei after the mid-September deadline.

TSMC that is the contract manufacturer for the HiSilicon Kirin chipset, has also stopped processing new orders from Huawei. Other components like cameras or network modules could also go scanty as most of the manufacturers are in some way or the other related to the US marketplace – be it direct manufacturing or licensing requirements. Given that Huawei sources a huge chunk of components from third-party suppliers, a hit to their smartphone business could eventually affect them as well.

According to TF International Securities analyst Ming-Chi Kuo, if the current situation doesn’t improve (which is highly unlikely), Huawei could be pushed into shutting down its smartphone business. In the best case scenario, they could see their market share tumble of as low as 30 percent. OEMs including Apple, OPPO, Xiaomi, and Vivo could benefit hugely from this unfortunate turn of events for Huawei.

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