Huawei to relaunch 5G phone despite US sanctions

Huawei, the Chinese technology group, plans to relaunch 5G phones as early as next year to overcome the stranglehold of US sanctions and regain market share.

The company is blacklisted by Washington for acquiring US technology for 5G smartphones, but has developed strategies to circumvent sanctions, according to three people familiar with the matter.

One approach is to redesign its smartphone without using restricted advanced chips, said two people familiar with the company’s plans. Huawei used to produce Kirin chipsets designed by HiSilicon and manufactured by leading chipmaker Taiwan Semiconductor Manufacturing Co before the United States tightened restrictions.

The company is reworking its phones to use less advanced chips made by Chinese companies that will enable 5G. Less advanced chips can impact user experience, especially when compared to previous-generation phones from Huawei and Apple’s iPhone 14.

Huawei, a Chinese national champion caught up in rising geopolitical tensions between Washington and Beijing, is struggling to claw back lost market share after sales plummeted following the imposition of U.S. sanctions in 2019. The income of its smartphone-based consumer business fell 50% year-on-year in 2021.

“This company cannot wait forever and must bring 5G phones back to market as soon as possible,” said a person familiar with Huawei’s plans.

“Huawei lost its leading position in the mobile phone market due to US sanctions years ago. Now, even their domestic market share keeps shrinking.

Another sanctions-busting solution Huawei is considering is collaborating on a phone case product that enables 5G, according to two people briefed on the matter.

There are already phone cases on the market. One box, developed by Shenzhen-listed Soyea Technology, has an eSIM module embedded with chips supporting a 5G connection.

A few weeks after Huawei launched its Mate 50 series in September, China Telecom, a Chinese state-owned telecommunications group, began selling the phone together with the cases. This year, Soyea also launched phone cases for Huawei’s P50 Pro.

“The company is doing its best to attract users at a time when the consumer market is weak,” said a Shanghai-based technology analyst, who asked to remain anonymous for fear of repercussions.

Huawei’s quest to overcome US restrictions and reclaim its position as the world’s largest smartphone vendor is a matter of national importance for Beijing as it works to expand. technological autonomyanalysts said.

“China’s technological self-sufficiency plan could be a potential driver to help Huawei join the 5G competition,” said Will Wong, Singapore-based analyst for research firm IDC.

But as long as US sanctions are in place, Huawei is at a serious disadvantage, experts said.

“Huawei would take so long to build internally or externally the supply chain it needs to get by that we’ll probably be in the 6G era before that can be done,” he said. said Douglas Fuller, an expert in China’s semiconductor industry. .

The sanctions thwarted Huawei’s plans to take on Apple. Richard Yu, general manager of Huawei’s consumer business group, admitted in a media interview in July that the group was “the only manufacturer selling 4G phones in the 5G era”, which he said was “a joke”.

Customers in China have started to struggle with the high price of Huawei phones that lack 5G services.

“In just one week [after Huawei launched Mate 50]hundreds of people have approached me about modifying their Mate 50 to support 5G networks,” said Michael Li, owner of a Shenzhen-based repair shop.

Some customers even brought their Mate 40, a previous generation Huawei 5G phone, and asked if Li could put the chips from the old phones into the new one. “Of course, it’s beyond my capabilities.”

Huawei did not immediately respond to a request for comment.

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