On the 5th of May, Donald Trump went tweeting away, escalating the trade war further. Slapping another 15% tariffs on Chinese goods. Within 10 days, there was another twist, with US companies banned from conducting business with Huawei.
Google was the first to pull out of business dealings with Huawei, stopping future Android updates. Chipmakers such as Intel, AMD, Broadcom and especially Qualcomm, whose Snapdragon chips are used by Huawei in their phones, have announced that they have to comply with the ban.
Huawei founder Ren Zhengfei was grateful to the US companies but not the US politicians, acknowledging their role in the development of Huawei and that their boycott are beyond their control.
Chipsmakers vs Chipmaker IP
In another article, I mentioned that although there is no certainty that alternate chipmakers will be able to take the role of the US chipmakers, but there are certainly plenty of alternatives to US chipmakers.
As a matter of fact, there are quite a number of phones that do not rely on Qualcomm for as their main chipset.
Almost half of the phones in the top 15 smartphones for 2019 do not fully rely on Qualcomm, especially Samsung, Apple and Huawei phones, who have their own chipsets.
Although I am simplifying things over here, I do not feel that the lack of chipmakers will spell the doom of Huawei.
It is another type of company that could see a larger impact than chipmakers. They are chipmaker IP companies, or in the proper term for them, Semiconductor Intellectual Property Core companies.
UK-based ARM Holdings is such a company. Despite being UK-based and Japan-owned, has announced that they will have to cut ties with Huawei due to an unfortunate situation with the reason being that some of their technology are from the US.
In a sense, the trade war has escalated beyond the actual border of the two countries.
Who exactly is ARM Holdings and why are they vital to Huawei? ARM Holdings is a British semiconductor and software design company.
The company does not actually manufactures any chips, but instead, license their technology to chipmakers such as Qualcomm, Nvidia, Intel and Huawei.
Most of the chips produced in the world are based on ARM’s technology. Huawei’s own Kirin processors are also based on ARM’s technology.
Without their technology, it is simply almost impossible to create your own chip.
ARM Holdings is not the only semiconductor IP company around, and of course, the option not to use them is there.
An example is the Adreno line of GPUs developed by Qualcomm. (Fine, it is not a CPU like Snapdragon, but it is still a chip developed by Qualcomm’s IP core.)
Outright, the top semiconductor IP vendor is ARM Holdings. There are other competitors in the market as well, such as;
|Cadence Design System||USA|
Each of these companies holds significantly less market share than ARM Holdings. With the remaining competitors dominated by USA companies.
It gives Huawei very limited options.
Building Their Own
Can Huawei do the same thing like Qualcomm and develop their own technology?
Of course it is possible, but it takes time and money. With the might of China, it is not impossible. I will definitely not bet against China creating their own technology eventually in the future. China is a different beast.
In any way, it takes time. Huawei has developed their own chipset which can be a possible solution for the exiting chipmakers, however, in comparison, the exit of ARM Holdings is the one that takes a larger beating.
As with all companies, the crucial question is whether the company can be around for the next 10 years or not? As it seems, Huawei can be.
As mentioned in this article, in the short term, it benefits nobody. In the long term, the trade war won’t last.