Will Huawei's own smartphone chip development bring momentum to the battle for share in the smartphone market with the iPhone?

Huawei, a Chinese manufacturer, once boasted the second-largest share of the smartphone market, but due to export restrictions in the United States, its share has dropped significantly. However, it has been reported that Huawei is succeeding in avoiding American export restrictions, which could lead to it returning to the smartphone market as a rival to Apple and the iPhone.

US spy bureau NSA 'hacked Huawei HQ': China confirms Snowden leak | South China Morning Post
https://www.scmp.com/news/china/politics/article/3235174/us-spy-agency-nsa-hacked-huawei-hq-china-confirms-snowden-leak

Huawei makes processor breakthrough in flagship smartphone | Financial Times
https://www.ft.com/content/11f1c1a3-4ac4-4b2a-99cd-e347928dc51f

iPhone versus Huawei battle; US National Security Advisor speaks
https://9to5mac.com/2023/09/20/iphone-versus-huawei-battle/

Exclusive: Huawei unit ships Chinese-made surveillance chips in fresh comeback sign | Reuters
https://www.reuters.com/technology/huawei-unit-ships-chinese-made-surveillance-chips-fresh-comeback-sign-sources-2023-09-20/

Huawei's chip breakthrough poses new threats to Apple in China
https://www.cnbc.com/2023/09/19/huaweis-chip-breakthrough-poses-new-threat-to-apple-in-china.html

In recent years, the United States has designated Chinese technology manufacturers such as Huawei and ZTE as ``national security threats '' and has restricted the export of products from American companies to these companies. Huawei was particularly hurt by regulations that prevented it from purchasing 5G modem chips from semiconductor manufacturers such as Qualcomm and Broadcom.

Huawei was once close to the top of the global smartphone market, but sales in the high-end smartphone market have declined due to delays in 5G support. As a result, in January 2021, it fell behind Apple in the global smartphone shipment ranking.

Apple overtakes Huawei and returns to second place in the world's smartphone shipment ranking - GIGAZINE

Meanwhile, on August 30, 2023, Huawei announced the new smartphone 'Mate 60 Pro'. Since the Mate 60 Pro is equipped with a 5G modem chip manufactured using the 7nm process by Chinese chip maker SMIC, it is reported that ``Huawei may be overcoming export restrictions led by the US government.'' .

Huawei's latest smartphone 'Mate 60 Pro' is found to be equipped with a 7nm process 5G chip, has China succeeded in avoiding strict export restrictions led by the United States? - GIGAZINE

Because China is subject to strict regulations regarding semiconductor manufacturing technology, it has been considered difficult to manufacture and develop chips using cutting-edge process rules such as the 7nm process. In fact, U.S. Secretary of Commerce Gina Lemond said, ``I was surprised that Huawei announced a smartphone equipped with an advanced chip that supports 5G, but there is no evidence that Huawei can mass-produce 7nm process chips.'' The US Department of Commerce also reported that ``Kirin 9000s (the chip installed in the Mate 60 Pro) must have been made using American semiconductor manufacturing technology,'' indicating that the Mate 60 Pro is completely made in China. I am skeptical of this claim.

The US government points out that there is ``no evidence that mass production is possible'' for the 7nm process 5G chip installed in Huawei's new smartphone ``Mate 60 Pro'' - GIGAZINE

On the other hand, the financial newspaper Financial Times reports that the SoC 'Kirin 9000s' installed in the Mate 60 Pro is equipped with eight CPUs, four of which are Arm CPUs, which are used in 99% of smartphones. It is reported that the architecture is adopted. According to Geekerwan, a Chinese technology company that analyzed the Kirin 9000s, other CPUs are also Arm-based, but seem to have Huawei's own design.

Kirin 9000s is designed and manufactured by semiconductor company HiSilicon, a subsidiary of Huawei. HiSilicon has adopted Arm's architecture to build its own processor core in the Kirin 9000s, 'giving us the flexibility we need to manufacture high-end smartphones while avoiding U.S. export controls. ” said analysts and industry insiders.

According to the Financial Times, ``Huawei's chip strategy clearly follows that of Apple, which has spent more than a decade refining Arm's basic architecture to make iPhones and Macs more competitive in performance.'' ``Semiconductor development requires complexity, huge costs, and engineering resources, so there are only a limited number of companies that can take this approach,'' he said, adding that Huawei could follow Apple's chip strategy and avoid US export restrictions. I pointed out that I was trying to avoid it.

Industry analyst Dylan Patel, who works at the consulting firm SemiAnalysis, said, ``Huawei may have made a breakthrough in developing chips that are designed in-house and do not rely too heavily on foreign companies.'' Brady Wang, an analyst at research firm Counterpoint Research, said that if Huawei were able to manufacture its own chips, it would be able to reduce patent licensing costs and differentiate its products from rival products that use off-the-shelf chips. He points out that it is possible.

In response to these reports, Apple-related media 9to5Mac reported, ``It appears that competition between Apple and Huawei in the smartphone market will be brewing again.''

The following is a graph published by the Financial Times that summarizes the sales share in the global smartphone market. Huawei's market share had been rapidly increasing until 2019, but after being subject to export restrictions from the United States, the growth in market share stopped, and from 2021 onwards, the market share has fallen sharply, and at one time it exceeded 20%, but by 2023 It has been halved by now. On the other hand, Apple maintained a market share of around 10% until around 2020, but since Huawei's market share has dropped, it has rapidly increased its market share, reaching nearly 20% by 2023.

9to5Mac also points out that Huawei's share is recovering in 2023, saying, ``Huawei's share has been increasing since the beginning of 2022.I think this is because Huawei has succeeded in manufacturing the Mate 60 Pro. I will,” he pointed out.

In addition, Reuters reports that Huawei is shipping new Chinese chips for surveillance cameras. The chip is being shipped by HiSilicon, a subsidiary of Huawei, and it seems that the company's chips have been shipped to surveillance camera manufacturers since 2023. According to officials, this is a new move by Huawei to avoid US export restrictions.

In response, the Chinese government denounced the hacking of Huawei servers by the US National Security Agency (NSA) leaked by Edward Snowden in 2013 on Wednesday, September 20, 2023. Did. According to a report published by the Chinese government's intelligence agency, the Ministry of State Security of the People's Republic of China , the NSA is attempting to steal 'critical data resources' from China through its internal hacking team, TAO, and the report states: 'TAO repeatedly conducted systematic and platform-based attacks against Huawei.'