Qualcomm has reportedly started to lobby the US government to allow them to sell Snapdragon processors to Huawei. The lobbying comes on the back of the latest developments in Huawei’s chip division, HiSilicon.
The US-China trade war has been a hot topic in global affairs. Being accused of providing sensitive information to the Chinese government, the US put Huawei on the ‘Entity List.’ Since then, no US company can work with Huawei, which is why Huawei does not have Google Mobile Services on their phones anymore.
The Chinese manufacturer was severely affected on the software front, given the inability to work with Google. However, due to domestic support in the home market, China, revenue was still substantial.
Where does Qualcomm come in, since the chipmaker is also a US company prohibited from working with Huawei? Here’s how.
Huawei through HiSilicon had been using their high-end Kirin chips on their phones, but that changes soon. Their smartphones will be taking a big hit on the hardware. Huawei’s Kirin chips that power their smartphone becomes obsolete come September 15, 2020.
In May, the US Commerce Department issued orders where any supplier using US software and manufacturing equipment had to obtain a license for doing business with Huawei. HiSilicon depended on TSMC (Taiwan Semiconductor Manufacturing Co) to manufacture its Kirin chips, but since TSMC uses US equipment, they understandably pulled out. Additionally, US software is required to design Kirin chips before outsourcing to TSMC for production.
US pressure has established Huawei can no longer produce their chips. With 5G becoming the norm, Huawei still needs 5G enabled processors to power their smartphones. The company’s need for a 5G processor is where Qualcomm’s lobby to the US comes in.
Reported by the Wall Street Journal, Qualcomm wants permission or the license to sell its processors to Huawei. Without the Kirin chips, Huawei is in the market to buy processors with 5G support for future smartphones. While the ban restricts Qualcomm from selling to Huawei, it does not restrict its competitors from doing the same.
The 5G chipset market share is in an infancy stage as we speak. If Qualcomm cannot sell to one of the top three smartphone makers globally, it would significantly affect their share in the 5G chip market. According to the report, Qualcomm could be losing a market worth $8 billion to competitors like MediaTek and Samsung annually.
Qualcomm lobbying to the US government is by no means a long shot. Companies like Intel, Micron, and Xilinx have already obtained licenses to do so. Permitting Qualcomm would also allow an American company to stay competitive globally.
However, smartphones are a big chunk of Huawei’s revenue. Allowing an exception to aid in that revenue could raise eyebrows as to Huawei’s ban. Additionally, Google would also have precedent to push for a license to work with Huawei.