The trade ban on Huawei by the US has affected the Chinese firm’s business in a lot of ways. The company can no longer sell smartphones with Google services and it has been barred from selling telecom equipment to network carriers in several countries. This is great news for Samsung’s smartphone and network equipment business arms, but it also means a chance for the company’s foundry and semiconductor arms to improve their businesses by selling chips to Huawei.
Huawei was recently cut off from TSMC’s chip supply following the trade ban and it was reported that Huawei might turn to Samsung for smartphone chip manufacturing. The South Korean firm has already been supplying OLED panels and memory chips to Huawei. However, it is being reported that Samsung might not make smartphone chips for Huawei, and we don’t know the reason behind this decision. So, the Chinese company might have to turn to the likes of MediaTek and Spreadtrum for chips.
Samsung’s decision could be bad news for Huawei
Huawei’s Kirin chips are usually pretty competitive in terms of features, performance, and power efficiency when compared to Exynos and Snapdragon mobile processors. While Huawei designs its own chips, it is a fabless firm, which means that it doesn’t have its own foundry to make Kirin chipsets. So, it has to depend on the likes of TSMC and Samsung for manufacturing Kirin SoCs.
The Chinese firm is already cut off from TSMC’s supply of chips. If Samsung doesn’t make chips for Huawei, the Chinese firm would have to either use older manufacturing processes or buy processors from MediaTek or Spreadtrum. Either way, it means that we would see slower and less power-efficient chips in Huawei phones, which is a bad sign for the company. Samsung might still supply low-end and mid-range 5G modems to Huawei in the future.
While the Chinese government has initiated a plan to bolster local industries and asked foundries to develop newer technologies to reduce the reliance on outside firms, they are not yet ready to make chips based on advanced processes such as 5nm and 7nm. It would take years for Chinese firms to compete with TSMC and Samsung in the foundry space.