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Primer on the chip shortage: We wrote up a twitter thread on the global chip shortage that has affected everyone from automakers to cyclists. Start here to get caught up!
âWhatâs happening: Huawei is hurting. The worldâs largest telecommunications company dominates (and supplies) much of the smartphone and telecom equipment markets. Due to aggressivie US government restrictions, Huawei has limited access to specialty chips and are shifting focus to software and alternative markets. Their way out of this mess? Spending more than Apple in R&D.
âWhy itâs important: Huaweiâs revenue is down for the third straight quarter, and their global telecom prowess is shrinking. The US governmentâs restrictions on Huawei: from accessing advanced American-designed chips to limiting their ability to sell 5G equipment globally, has slowed the behemoth â but these restrictions have also exacerbated the chip shortage crisis being felt by manufacturers and consumers worldwide.
âThe details: The US has placed serious restrictions on Huawei, forcing them to sell of business units, and shift focus into electric vehicles, software, and coal-mining.
âWhatâs happening: Huawei is hurting. The worldâs largest telecommunications company dominates (and supplies) much of the smartphone and telecom equipment markets. Due to aggressivie US government restrictions, Huawei has limited access to specialty chips and are shifting focus to software and alternative markets. Their way out of this mess? Spending more than Apple in R&D.
âWhy itâs important: Huaweiâs revenue is down for the third straight quarter, and their global telecom prowess is shrinking. The US governmentâs restrictions on Huawei: from accessing advanced American-designed chips to limiting their ability to sell 5G equipment globally, has slowed the behemoth â but these restrictions have also exacerbated the chip shortage crisis being felt by manufacturers and consumers worldwide.
âThe details: The US has placed serious restrictions on Huawei, forcing them to sell of business units, and shift focus into electric vehicles, software, and coal-mining.
- Huawei is selling its budget smartphone business unit, and forecasts up to $40B in lost smartphone revenue this year. Revenue from telecom equipment (ie basestations and routers) fell 14%.
- Despite production challenges and huge losses in revenue, Huawei remains profitable. Their âinsurance planâ? A massive R&D budget that, at $22B, beats even Apple.
- The Trump administration blocked Huawei from contracting US-based machinery and software. China and Huawei retaliated by cutting off US companies from Chinese chips, and began stockpiling chips from TSMC. China's import of chips surged by more than $50B to $380B in 2020.
- The US restrictions on cutting off Chinese fabs from using US tools to make chips also forced customers to move production to other manufacturers, like TSMC. TSMC became overbooked, with no easy way to quickly boost production. This further strains the global chip supply chain, among other major factors like covid-19 and natural disasters.
- Huaweiâs CFO, Meng Wanzhou, made untrue statements to a major bank about Huaweiâs operations that were in violation of US sanctions in Iran. For that, through some complicated global policy, she was on house arrest in Canada. While she was recently released (after 3 years), the Biden administration say this doesnât indicate a softening of US policy.
