Chinese military-owned telecommunications conglomerate Huawei wants to buy Qualcomm’s latest chips for their smartphones, a verboten move in the eyes of the US government, whose sanctions against the company quoting cyberespionage, racketeering, intellectual property theft, and corrupt, unethical corporate practices has the Asian manufacturer scrambling for help as they begin to feel the chokehold of the sanctions the US imposed on them earlier in May 2020.
Huawei’s disastrous presence at IFA Berlin, the largest consumer electronics fair in Europe, coupled with their latest convention in Shanghai where their top brass expressed that they’re fighting for survival has them facing a series of hurdles to keep providing their consumer electronic devices and network equipment at competitive prices to those interested. There is, however a caveat for this business strategy: The United States of America will frown at any country that engages in business with Huawei.
US companies seeking to sell as much as a single component for the Chinese military-owned tech giant will have to apply for a license from the United States.
Qualcomm’s impressive 5G chipset rollout, announced brilliantly at IFA Berlin 2020 attracts the attention of the Chinese manufacturer who claims to be the world’s top mobile phone seller, despite their financial troubles.
For Qualcomm, dealing with Huawei means money. Qualcomm requested a license from the American government to sell the Chinese their chips so they can put them in their consumer electronic devices.
Blacklisted and Short of Chips
Huawei is in a US blacklist that restricts American companies from engaging in commercial activity with the Chinese without US government oversight, a move that came in the light of the United States vs China trade war.
The Chinese tech sector relies heavily on western innovation for its massive industrial manufacture parks, research and development laboratories, and commercial relations. Huawei, ZTE, and many others rely on these sorts of deals to buttress their competitiveness around the world. Their products, far from being of bad quality are beautifully designed, have an appeal, and have a variety of lines for all sorts of budgets.
But sanctions of the likes that the US imposed on Huawei have their effects, the Chinese company produces their domestic smartphone chips —Kirin— and subcontracts a Taiwanese company for their manufacture, but with the sanctions in place, the Taiwan Semiconductor Manufacturing Company can no longer supply the Chinese telecoms maker with their products.
Despite stocking up in parts and components for the next years, the Huawei leadership has very few options in the Western world to sell their cash-cow: 5G network equipment. Huawei’s shortage of high-end chipsets for their top-tier segment of consumer electronic devices has them, as Guo Ping expressed in a company conference held yesterday in Shanghai: “On survival mode”.
And while Qualcomm couldn’t care less about the metapolitics of this Sino-American tug-of-war for economic supremacy, Qualcomm cares about putting their top-level chips everywhere they can, and who can blame them? Qualcomm wants the same sweetheart deal that Intel —who has the OK to sell to Huawei from the US government— has.