In 2019, the United States government imposed sanctions on the Chinese technology giant Huawei, citing national security concerns. The sanctions severely limited Huawei’s access to US technology, including crucial components for its smartphones and telecommunications equipment. The move came as part of a wider trade war between the US and China and had significant implications for the global technology industry. Huawei denied any wrongdoing and insisted that it posed no threat to national security. However, the company’s business suffered as a result of the sanctions, with some countries banning the use of Huawei equipment in their 5G networks. Since then, Huawei has had to make a lot of changes to its operations and device catalogue.
The sanctions prevented Huawei from accessing critical components and software from US companies, including Google’s Android operating system, which is used on the majority of smartphones worldwide. As a result, Huawei was forced to develop its own operating system and reduce its reliance on US technology. However, this process was time-consuming and costly, and Huawei’s smartphone sales suffered as a result. In 2020, Huawei’s smartphone shipments declined by over 20%, and the company was forced to sell its low-end smartphone brand, Honor, to avoid further losses.
Huawei’s rotating chairman, Eric Xu, has recently claimed that China’s semiconductor industry will be “reborn” as a result of U.S. sanctions, and said that Huawei would support efforts by the Chinese semiconductor industry to become more self-sufficient. Semiconductors have been a major point of contention in the ongoing U.S.-China tech battle, with Washington imposing export restrictions on Chinese firms in an attempt to limit their access to American technology. Huawei, in particular, has been affected by the restrictions, which have prevented the company from accessing the latest cutting-edge chips it requires for its smartphones. However, Xu argued that the restrictions could ultimately strengthen China’s domestic semiconductor industry, rather than weaken it.
Chinese firms are now trying to develop the tools required for semiconductors domestically, but this will prove to be an uphill task. Last week, Xu confirmed that Huawei and other domestic firms had jointly created electronic chip design tools needed to make semiconductors sized at 14 nanometers and above. However, Huawei ideally needs chips of a much smaller nanometer size for more advanced applications, which they are currently struggling to obtain. The smaller the nm size, the better their chips will perform against the giants in the smartphone industry, such as Apple and Samsung.
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