The Chinese tech giant will be working around restrictions imposed in the US to release its 5G phones. Huawei was blacklisted by the US for acquiring US technology for use in its 5G smartphones. The company is set to release these new phones to get back on the market but will need to rethink and redesign its phones to avoid the restrictions.
The company is expected to relaunch a new fleet of 5G smartphones as early as next year to overcome the iron grip caused by US sanctions on the phone maker.
The sanctions were imposed after the company acquired US technology to use in its 5G smartphones and this led to the company being officially blacklisted by Washington. According to three inside sources, the company has however been developing new schemes to go around the sanctions.
Two of these sources hinted that one of its strategies is redesigning the phone so it does not use the restricted advanced chips. Before the US imposed these sanctions, the tech giant produced Kirin chips that were designed by HiSilicon and were manufactured by Taiwan Semiconductor Manufacturing Co a leading Taiwanese chipmaker.
The company is also modifying their phones to use 5 G-enabled chips made by Chinese companies though these may be less advanced. Having less advanced chips in smartphones may affect user experience and users will likely notice the difference if they have used previous generations of Huawei phones or iPhone 14 by Apple.
The Chinese tech giant has been caught in the middle of the increasing geopolitical tension between Washington and Beijing and this has affected Huawei’s market share. Since the US imposed sanctions on the company in 2019, sales have drastically gone down and the company is currently seeking to regain market share. Estimates indicated that in 2021 the company’s revenue fell to 50%.
One informant familiar with the company’s plan said “the company cannot wait endlessly and needs to bring 5G phones back to the market as soon as possible.” On commenting on how the sanction shave affected the company, the informant said “Huawei has lost its leading position in the mobile phone market to American sanctions years ago. Now even their domestic market share keeps dwindling.”
Another approach that the company is considering using to bypass the sanctions is to use 5 G-enabled phone cases. The company will have to collaborate with the developers of the product if it wants to use this approach.
Phone cases that support 5G are already available on the market. Soyea Technology a Shenzehen listed company developed a phone case with an inbuilt eSim module that has chips that support a 5G connection.
Soyea’s technology has already been used on Huawei phones, for example following the September launch of Huawei’s Mate 50 series, the Chinese state telecom group China Telecom began selling the Mate 50 with a Soyea phone case. Soyea also launched phone cases for P50 Pro by Huawei earlier this year.
A Shanghai-based tech analyst who opted for anonymity said “the company is trying its best to appeal to users at a time when the consumer market is weak.”
Another analyst added that the need for Huawei to rise above restrictions imposed by the US and the quest to regain its former place as one of the leading smartphone sellers is also important to Beijing as a nation as it strives to achieve self-sufficiency technologically.
An analyst based in Singapore who works for the research company IDC, Will Wong said that “China’s technology self-sufficiency plan could be a potential driver in helping Huawei to join the 5G connection.
But according to experts in the field, Huawei is at a huge disadvantage if the US sanctions remain intact. According to an expert in China’s semiconductor industry Douglas Fuller, “it would take Huawei so long to build up internally or externally the supply chain it needs to pull this off from that we’ll probably be in the 6G era before this can be done.”
Sanctions and restrictions imposed by Washington have disturbed Huawei’s plans to take on their rival, Apple. The pushback has affected the race between the two companies. In a media interview in July, the chief executive of Huawei’s consumer business group Richard Yu acknowledged the awkward position that the group is in and said that it was “a joke” that they were “the only manufacturer selling 4G phones in the 5G era.”
Sales have also been affected in China with customers pushing back against high-priced Huawei smartphones without 5G connectivity. One repair shop owner in Shenzhen, Michael Li said “in just a week (after Huawei launched the Mate 50), hundreds of people have approached me to modify their Mate 50 so that it can support 5G networks.” He added that some customers were even bringing previous generations of Huawei phones like Mate 40 that were 5G enabled to see if he could take out the chips from the old phones and put them into the new gadget. Li admitted that that was beyond his ability.
With other leading companies in the industry building on 5G technology to improve the user experience for smartphone users, Huawei is working on going back into the market with 5 G-enabled phones despite the imposed sanctions by the US.
The company is expected to work around the restrictions using several strategies that if they work can push the company back on the list of top sellers and eventually improve its market share. Any delays that the tech giant may make will leave them far off behind rival companies that will continue to push new boundaries of connectivity in smartphones.
Experts believe that the Chinese tech group is racing against time to catch up and that any catching up that the tech group will have to do will be costly considering the low sales and returns of their products. Huawei did not immediately respond to a request for a comment on the matter.