Huawei says smartphone chips running out under U.S. sanctions
BEIJING—Chinese tech giant Huawei is running out of
processor chips to make smartphones due to U.S. sanctions and will be forced to
stop production of its own most advanced chips, a company executive says, in a
sign of growing damage to Huawei’s business from American pressure.
Huawei Technologies Ltd., one of the biggest producers of
smartphones and network equipment, is at the centre of U.S.-Chinese tension
over technology and security. The feud has spread to include the popular
Chinese-owned video app TikTok and China-based messaging service WeChat.
Washington cut off Huawei’s access to U.S. components and
technology including Google’s music and other smartphone services last year.
Those penalties were tightened in May when the White House barred vendors
worldwide from using U.S. technology to produce components for Huawei.
Production of Kirin chips designed by Huawei’s own engineers
will stop Sept. 15 because they are made by contractors that need U.S.
manufacturing technology, said Richard Yu, president of the company’s consumer
unit. He said Huawei lacks the ability to make its own chips.
“This is a very big loss for us,” Yu said Friday at an
industry conference, China Info 100, according to a video recording of his
comments posted on multiple websites.
“Unfortunately, in the second round of U.S. sanctions, our
chip producers only accepted orders until May 15. Production will close on
Sept. 15,” Yu said. “This year may be the last generation of Huawei Kirin
high-end chips.”
More broadly, Huawei’s smartphone production has “no chips
and no supply,” Yu said.
Yu said this year’s smartphone sales probably will be lower
than 2019’s level of 240 million handsets but gave no details. The company
didn’t immediately respond to questions Saturday.
Huawei, founded in 1987 by a former military engineer,
denies accusations it might facilitate Chinese spying. Chinese officials accuse
Washington of using national security as an excuse to stop a competitor to U.S.
tech industries.
Huawei is a leader among emerging Chinese competitors in
telecoms, electric cars, renewable energy and other fields in which the ruling
Communist Party hopes China can become a global leader.
Huawei has 180,000 employees and one of the world’s biggest
research and development budgets at more than $15 billion (U.S.) a year. But,
like most global tech brands, it relies on contractors to manufacture its
products.
Earlier, Huawei announced its global sales rose 13.1 per
cent over a year ago to 454 billion yuan ($65 billion) in the first half of
2020. Yu said that was due to strong sales of high-end products but gave no
details.
Huawei became the world’s top-selling smartphone brand in
the three months ending in June, passing rival Samsung for the first time due
to strong demand in China, according to Canalys. Sales abroad fell 27 per cent
from a year earlier.
Washington also is lobbying European and other allies to
exclude Huawei from planned next-generation networks as a security risk.
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