A few years ago, Huawei was a major rival of Samsung's. In fact, they even temporarily surpassed global smartphone sales. But then US imposed restrictions upon them, banning their phone sales in the US and stopping their network equipment business; not to mention blocking them from receiving essential materials for their mobile phones. It certainly seemed like Huawei was finished... until they declared that they were back in business! Is it time for Samsung to start worrying?
Huawei achieved a 7.2% growth in Q4 2022 sales (CNY 191 billion, or $27.4 billion) and a marginal increase in full-year sales (CNY 636.9 billion, or $92.3 billion) despite slowing smartphone sales outside of China by diversifying their revenue streams to include the selling of patents, technology, and services to automakers, miners, and industrial parks as well as levying patent royalties on Apple and Samsung. Alan Fan, Huawei’s global head of IP reported that they signed over 20 patent license agreements throughout the year covering everything from connected automobiles to smartphones. Xu commented on the success saying that US restrictions have become their new normal but digitalisation and decarbonisation remain an opportunity for future growth regardless of macroeconomic uncertainty.
Huawei applied for a patent concerning the production of semiconductor chips which are 7nm or even better.
Huawei has reportedly been investing in researching, creating, and locating substitutions to U.S. solutions for the last three years. It was confirmed that the firm achieved success in EUV lithography processes via China's National Intellectual Properties Administration; if its patent request is approved, Huawei may no longer be reliant on Samsung, ASML, or American technologies to create innovative smartphone chipsets (<10nm).
Making a machine with more than 100,000 components that can do EUV lithography is no easy feat. It requires extensive collaboration and a large supply chain for any brand to have success creating sub-10nm chips. Huawei has been investing heavily into the EDA, equipment, foundry, materials, packaging, and the testing phases of semiconductor chip production. Whether or not they can make 5G chips and smartphone SoCs on their own is still up in the air; only time will tell.
Without GMS, Huawei phones will likely remain unpopular since they won't feature commonly used Google services such as Gmail, Maps, and YouTube. While Samsung is unlikely to be affected in the short-term due to security apprehensions surrounding Chinese devices, they should strive to continually strengthen their technologies and products in order to remain ahead of Huawei.
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