A study by Counterpoint Research claims that Huawei has exhausted its supply of custom-built semiconductors for its smartphones due to the effects of US trade restrictions.
This comes after the US trade restrictions essentially limit the company's access to innovative new processors.
Amid the US Trade Limits
South China Morning Post (SCMP) reported that Shenzhen-based Huawei has found it difficult to have a major chip maker produce its new in-house-designed integrated circuits (ICs) due to trade restrictions imposed by the US government in August 2020.
These restrictions apply to Huawei's access to microprocessors developed or produced using US technology and are not limited to those found in the US.
In 2019, both Huawei and its chip design subsidiary HiSilicon were included in the Entity List, a trade blacklist compiled by US officials.
Research companies Haitong and Canalys showed that Huawei had been storing essential US components for over a year. At the same time, HiSilicon said it had a contingency plan to secure the firm's existence at the time.
As per Counterpoint's newest assessment of the worldwide smartphone application processor market share, "Huawei has finished its inventory of HiSilicon chipsets."
The percentage of the worldwide smartphone application market that HiSilicon had in the third quarter of this year was zero, down from 0.4% in the previous quarter and 3.0% in the same period last year.
Reports indicate that the new and sophisticated ICs from major contract chip producers like Taiwan Semiconductor Manufacturing Co. (TSMC) or Samsung are impossible for Huawei to purchase because of the stricter US sanctions.
Also Read: US Bans Import of Equipment from Huawei and ZTE Telecom, Cites Data-Security Risk
Impact on Business
Huawei, which has a presence in over 170 countries, is still having trouble three years after being banned by the US, as shown by the most recent industry statistics.
According to Counterpoint data, HiSilicon's sales of sophisticated Kirin processors used in Huawei's smartphones amounted to 16% of the worldwide chipset market share in the second quarter of 2020 before the US strengthened the trade sanctions.
As a result of the restrictive US trade policies, which have lowered China's total share of the global chip industry, HiSilicon fell out of the ranks of the world's top 25 semiconductor manufacturers, according to a study issued in April by research company Gartner.
Since a lack of Kirin chips has hampered its smartphone business, Huawei has been under intense scrutiny.
US sanctions meant that the business could not include 5G mobile connectivity in its latest Mate 50 series smartphones, which were released in September.
Qualcomm chipsets are at the heart of the company's newest flagship handsets, which have both 4G and satellite connectivity.
Huawei has suffered a decrease in its market share in China, where it was formerly the dominant smartphone provider. In fact, it briefly overtook Samsung Electronics as the leader in global smartphone shipments in mid-2020.
As per statistics from technology industry research firm Canalys, Vivo, Oppo, formerly Huawei budget phone brand Honor, Apple, and Xiaomi were the top five vendors in China during the third quarter.
Recent Move
As its once-profitable smartphone market declines, Huawei has been attempting to increase revenue by expanding its patent-licensing agreements.
It was announced earlier this month that Huawei would license some of its smartphone technology to Oppo, a competitor.
Related Story: Huawei Will License Its 5G Technology Following US Sanctions
