The American mobile chip making giant, Qualcomm, is trying to persuade the US government to allow them to sell its chips to Huawei for their 5G smartphones. According to reports, Qualcomm selling its 5G chips to the Chinese multinational technology company might end up helping American business.
The US trade ban on Huawei has severely affected the manufacturer’s inventories. When the US increased sanctions against Huawei in May, it was immediately clear that it would be a huge blow to the Chinese seller, as the company would no longer be able to use components from US suppliers.
In fact, the impact of sanctions quickly proved to be as expected. Just last week, Huawei announced that its latest flagship smartphone, Huawei Mate 40, would be the last model to use high-end Kirin processors manufactured by its subsidiary HiSilicon.
The US trade ban on Huawei will not prevent the manufacturer from purchasing the necessary 5G smartphone parts from alternative suppliers. However, Qualcomm would lose as much as $ 8 billion a year, if it was not to sell its chips to Huawei. As a result, Qualcomm itself began lobbying the US government for a license to continue supplying 5G chips to the Chinese vendor. Such a deal would be an important business strategy for both firms, but given Huawei’s volatile position during the US-China trade war, it may be smarter for Huawei to focus more on alternative chipmakers.
There is no guarantee that Qualcomm will get the deal with Huawei, even if the US government gives the approval. Although the Chinese brand has made a concerted effort to source as many components as possible from non-US companies, several companies such as Intel, Micron and Xilinx are already licensed to do business with Huawei.