Huawei’s 5G handset future: Is there any hope?

huawei’s 5g handset future: is there any hope?

In June, news emerged that Huawei will potentially come back into the 5G smartphone space by the end of 2023. This information apparently was provided to research firms anonymously from “industry sources including Huawei’s suppliers”. Huawei would not comment on the news, and neither would SMIC, the fab Huawei is using.

But what would a 5G phone using SMIC N+1 7nm process look like? Could Huawei reach its 2019 peak again? Who would buy such a phone? Is there any hope for Huawei’s handset future?

The past

In the not-so-distant past, Huawei handsets were the second best-selling brand in the market. In 2019, Huawei handsets accounted for roughly 15.6% of global handset sales, beating Apple but falling just short of Samsung. This amounted to nearly 241 million Huawei phones being sold that year.

Most of these phones – not all, but definitely the high-end phones – used Huawei’s own Kirin application processor chips. They were 5G enabled, ran Android, were fabricated at TSMC on the latest process nodes, and very rarely got anything but positive reviews. At the time, Huawei and HiSilicon had access to the latest EDA tools from Synopsys and Cadence, the latest IP from Arm among many many others, and full access to the Google ecosystem for the export market.

The present

Since 2019, Huawei and HiSilicon have lost access to all these suppliers to varying degrees. No access to properly supported EDA tools and foreign fabs has meant it has moved flagship phones over to Qualcomm as it can no longer manufacture its Kirin AP. Restrictions have also meant its phones are now limited to 4G as it is not allowed to buy 5G-enabled chips and is not able to produce them either. Using Qualcomm chips still means Huawei sells capable phones like the Mate 50, but it is the lack of Google services that means its products are now difficult to recommend in Western markets, even if they do take nice pictures of the moon.

Even in China, where Google services do not exist, Huawei’s phone sales plummeted in 2020 and 2021, with the brand dropping out of China’s top five. But now, in 2023, Huawei’s sales have increased by 76% year-on-year in Q2 bringing the brand into joint fifth place with Xiaomi at around 13% of the China market. In a market where all other brands (other than Apple) are losing sales, Huawei is somehow managing to increase its own at the expense of BBK, its previous subsidiary Honor, and Xiaomi.

Why anyone would buy a worse phone at the same or more expensive price can only be down to marketing and a sense of national pride, as although its phones are good, so are Oppo’s and Vivo’s – and they have 5G. Whatever it may be, Huawei has obviously done a great job at reviving its phone brand in the last year within China. Maybe aftermarket 5G enabling Huawei smartphone cases have helped.

The future

So let’s say the rumors are true. Huawei will have its 5G phone by the end of the year using its own chip. Unlike TSMC EUV 7nm, SMIC has only been able to achieve its 7nm through multi-patterning, basically doing multiple lithographic exposures to get the desired resolution. I expect SMIC’s approach will result in low yields and have limited capacity, meaning the resulting chips could potentially be more expensive. This could be compounded by the fact that Huawei handset APs are usually for internal use, not to be sold to other phone brands, so there is limited scale compared to Qualcomm or MediaTek. One could envision Huawei allowing other brands to use it to help SMIC scale up, but how would its performance compare to Qualcomm and MediaTek? Would other brands even want to buy it if it cost more and performed worse?

This is clearly very strategic for China, and would be a big win, but it puts SMIC in a difficult position. Historically it has always kept its head down, but announcing such a feat could put it in the spotlight for further sanctions and equipment it needs to expand its mature node capacity.

Perhaps the chip isn’t the key factor to Huawei’s future global success. I feel it will certainly become a successful brand in China. China-designed chips, China-manufactured chips, and a China-made OS are all very potent selling points in the market. From a global perspective,  it would still have a worse chip, even compared to other Chinese brands, but more importantly, no Google services, which is a killer for most of the rest of the world.

This will be a win for Huawei and for China, but Huawei won’t become the Huawei of 2019 any time soon. In my experience, HiSilicon has always had a great chip design team, but now apparently using its own EDA tools – and I suspect still some Western tools (supported or not) – along with a new process at SMIC rather than TSMC, means this chip won’t be world beating and potentially not commercially viable unless yields and scale are improved. For now, this will be a domestic play.


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