The shockwaves generated by the sudden release of Huawei’s Mate 60 Pro series continue to reverberate throughout the past week. As more information emerges, it becomes increasingly evident that a significant breakthrough has been achieved in China’s domestic chip manufacturing technology—a development that the United States has been actively trying to impede through heightened sanctions in recent years.
With the rise of Chinese chip manufacturers, industry experts are anticipating a potential restructuring of the global industrial landscape. This transformation may pose greater market challenges for American chip giants like Qualcomm, particularly if Washington continues its ongoing sanctions.
Just last week, the Chinese tech giant surprised everyone by announcing the commencement of preorders for the Mate 60 Pro smartphone. While Huawei did not disclose specific chip details, teardown reports have revealed that the phone is powered by a new domestically-produced Kirin 9000s processor.
The resurgence of Huawei’s Kirin chips underscores the company’s disruptive prowess in chip design and manufacturing. This development is poised to shake up the global semiconductor industry, presenting formidable challenges to players such as Qualcomm and TSMC, according to Adela Guo, a research director at IDC Asia Pacific.
Qualcomm is likely to face the most significant impact, as per an analysis conducted by TF International analyst Ming-Chi Kuo. According to Kuo’s report, Huawei is anticipated to fully adopt its Kirin processors in new models beginning in 2024. Consequently, Qualcomm stands to lose all Huawei orders and faces the risk of being supplanted by non-Huawei Chinese smartphone brands, given Huawei’s expanding market share.
Kuo’s analysis suggests that Qualcomm’s shipments of System-on-Chip to Chinese smartphone brands in 2024 could drop by at least 50-60 million units compared to 2023. Additionally, competition between MediaTek and Qualcomm is expected to intensify, especially in the lower- to mid-tier market segments, potentially leading to a price war as the two companies strive to regain customer support and clear inventory.
The potential confirmation of Huawei’s Kirin chips underscores that, under unique circumstances, domestic companies can establish a semiconductor industry chain despite U.S. pressure. This development prompts a reevaluation of the effectiveness of U.S. suppression policies, according to He Jun, a senior researcher at Anbound, an independent think tank.
Meanwhile, U.S. politicians have been closely monitoring this breakthrough and expressing concerns. U.S. National Security Adviser Jake Sullivan stated during a White House press briefing that the U.S. needs “more information about precisely its character and composition” to determine if parties evaded U.S. restrictions on semiconductor exports to create the new chip.
Representative Mike Gallagher, a Wisconsin Republican who chairs a congressional committee on China, called for a more aggressive approach toward China after this breakthrough. He urged an end to all U.S. technology exports to Huawei and SMIC in a statement on Wednesday.
Adela Guo, commenting on this breakthrough, described it as a “clarion call” that instills confidence in domestic tech companies, demonstrating that they can navigate technological barriers and achieve independence. However, He Jun, the researcher, emphasized that the chip and its application market constitute a shared and open system, stressing the importance of cooperation to facilitate market sharing and leverage strengths.
Regarding the possibility of the U.S. single-handedly disrupting the semiconductor industry ecosystem, John Neuffer, president of the U.S. Semiconductor Industry Association, emphasized that no country can reverse the chip supply chain and that the semiconductor industry relies on China as both a crucial part of its supply chain and a substantial customer base.