SHENZHEN, China (Reuters) – Huawei Technologies Co Ltd this year is likely to see a slower 5G industry and push further into software, while hoping that the Their smartphones are being repaid from U.S. sanctions that last year hit the heart of the chip-dependent group, analysts said. .
Limited access to high-end semiconductors means limitation during China’s network upgrade, they said, while the separation of its mobile arm puts Huawei down to rankings while continuing to develop a proprietary operating system.
China’s leading telecommunications equipment manufacturer was blacklisted by the U.S. trade in May 2019 due to national security concerns. Huawei has denied it is a threat.
That effectively prevented U.S.-based companies from selling U.S. Huawei essential technology. In August last year, the ban was extended to foreign companies by U.S. industry, reaching major suppliers such as Taiwan Semiconductor Manufacturing Co. Ltd (TSMC).
The change hit the heels of Achilles as Huawei relies on TSMC to make advanced chips for its handsets, fifth-generation (5G) network base stations, servers, cloud computing and artificial intelligence products, Paul Triolo said , head of global tech policy at Eurasia Group. Stocks only last that long, he said.
“The movement of this death penalty does not involve sudden execution,” technology analyst Dan Wang said in a messenger note. “Instead, the process is much more like a slow process.”
Huawei declined to comment.
Wang said Huawei will feel the worst impact in its consumer business, which accounted for 54% of revenue in 2019.
In November, Huawei knocked off its Honor budget smartphone line in sales founder Ren Zhengfei said it would allow the brand to get back into chips. Huawei could look to do the same with its main lines this year, Triolo said.
Huawei was the world’s largest smartphone maker as far back as the second quarter of 2020, but Honor sales and chip shortages are likely to pull out of the top six this year, Trendforce data company.
His fortunes could change with the founding of U.S. president Joe Biden, since analysts expect more mercy towards Huawei’s smartphone business. The inauguration this month comes as Chief Financial Officer Meng Wangzhou talks about a deal with U.S. prosecutors over allegations of doing business with Iran.
In the meantime, Huawei is likely to focus on the Harmony operating system it is developing for its smartphones after being cut off from Android Alphabet Inc, said Nicole Peng, VP of Mobility at Canalys consultation.
Elsewhere in software, Huawei is likely to push more towards services such as cloud computing and internet of things devices, although these are unlikely to correct slowing down in phones smart and telecommunications infrastructure, analysts said.
Huawei’s network industry has clear prospects, but with major markets such as Britain and Japan banning their equipment, there is likely to be a focus on China, analysts said.
The company has enough chips to make about 500,000 5G stations, Jefferies analyst Edison Lee said. But instead of using that provision, the government is likely to introduce slow 5G, adopting a “middle-of-the-road approach to strike a balance between expansion. broadcast and waiting to catch Huawei, ”he said.
Reporting by David Kirton; Edited by Christopher Cushing