Huawei Technologies has built up its reserves for important US made Chips, which will last for up to 2 years. According to sources, the move was made by the Chinese tech giant to safeguard its operations against US sanctions.
Sources revealed that the ample reserves were primarily for server grade processors made by Intel and Xilinx for programable chipsets. These processors are apparently the ‘most essential components’ that Huawei uses for its base stations and emerging cloud business. For those unaware, the Chinese vendor is a major player in the 5G networking infrastructure and equipment industry and is also developing cloud based services, similar to Amazon.
The recent sanctions from the US government had cut off the chip supply to Huawei, but it seems that the company had already prepared in advance. It currently has an inventory that will last for 1.5 or up to 2 years. However, analysts have claimed that the reliance on stockpiled chips could end up hindering the company’s competitiveness.
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Huawei had recently revealed that it had spent 167.7 billion Yuan ($23.45 billion) in stockpiling chipsets, components, and more in 2019, which is a significant jump of 73 percent from 2018. In particular, it seems that Huawei was more focused on building reserves for programmable chips from Xilinx, since it’s difficult to replace the processors at the moment, even from its own chip designer, HiSilicon.
Similarly, the company has also increased stocks for memory components like NAND and DRAM from Samsung, SK Hynix, Micron, and Kioxia during the same period. So, judging by how this looks, it would seem that Huawei is preparing for a battle of attrition against the US government. The impacts of the new US regulations will likely impact the Chinese OEMs operations, but only time will tell.
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(Via)
