For Huawei, it’s two steps forward, one step back

• Huawei appears to be making steady progress in telecom, claiming its home-grown chips can provide advanced performance for key devices and infrastructure
• Its eagerly anticipated Mate 70 smartphones are to be unveiled on 26 November, while it has also announced AI-driven innovation for telcos 
• But despite its progress, the Chinese vendor’s chip development prospects are being hampered by ongoing US sanctions

Despite multiple business and operational challenges over the past few years, Huawei is still a big hitter in the global telecom sector, according to research firms and its main rivals among many others, and it continues to make significant progress in multiple markets. But there is also evidence that it will continue to struggle to achieve technical parity with many of its rivals  in the coming years because of ongoing US trade sanctions, according to a recent report.

The giant Chinese vendor, reports Bloomberg, has “hit snags” that have stalled its effort to “match American technology”. The article, which cites sources with knowledge of developments, suggests Huawei is designing its next two AI Ascend processors, which the vendor hopes can match the chips developed by Nvidia, based on the “same 7-nanometer (nm) architecture that’s been mainstream for years”. This is because US sanctions mean it doesn’t have access to the lithography systems developed by Dutch market leader ASML Holding. As a result, its chips will be several generations behind those developed by its global rivals, and manufactured by Taiwan’s TSMC, for at least the next two years and such restrictions will impact its smartphone plans.  

To add to Huawei’s chip challenges, its main processor production partner, China’s Semiconductor Manufacturing International Corp, is “struggling to churn out even 7nm chips at steady volumes,” according to the report, which means Huawei’s production demands may not be met. 

Despite such challenges, Huawei is managing to maintain, even strengthen, its position with customers around the world. Ericsson CEO Börje Ekholm recently noted in an interview with Bloomberg in New York that Huawei remains its biggest global rival and that sanctions have largely proven ineffective. 

And despite those years-long, US-led sanctions, Huawei continues to be not only the largest telecom infrastructure vendor in the world but, according to research firm Dell’Oro Group, both in its domestic market and also beyond – see Thought Huawei had sidelined telecom? Think again.

As previously noted, Huawei continues to invest in telecom network technology R&D, and its latest infrastructure innovation involves its so-called 5.5G technology. This, it claims, can offer 10 times the speed of a standard 5G radio access network, with peak downlinks running  up to 10 Gbit/s, while uplinks offer connections up to 1 Gbit/s. It is capable of supporting 5G’s ultra-reliable, low-latency communication (URLLC) capabilities, regarded as a key capability for advanced  applications.

Its newly announced GigaGear offering for carriers is flagged as the world’s first 5G and 5.5G ‘Experience Accelerator’, which means it can pep up performance to support real-time services, such as live streams, robotaxis, and human-like AI agents.

Meanwhile on the smartphone front, Huawei claims that despite US sanctions, its users appear confident (even enthused) enough in Huawei’s ability to match their requirements to have already pledged more than two million pre-launch orders for the latest Huawei Mate 70 devices, even before seeing their technical capabilities and pricing. That confidence comes off the back of what Bloomberg admits in the article has been seven consecutive quarters of strong demand for the Mate 60, launched last year.

The new Mate 70s, according to Huawei CEO Richard Yu, will be revealed on 26 November: They will be the first Huawei smartphones not to be based on the Android open-source operating system but will instead use Huawei’s Harmony mobile operating system.

But can Huawei meet customer demands if it’s going to struggle with its chip supply chain? It seems that domestic support for the company is strong enough to get it through the coming years. In fact, it makes sense that Chinese smartphone users aren’t straining at the bit to buy advanced features at higher prices, just as many smartphone users in the rest of the world are similarly reluctant to splash out when their existing devices and services remain highly usable. There are no looming ‘killer applications’ at this stage that require a major device upgrade.

Device speed is by no means everything. Smartphone users also value features like slick high-resolution photography – something that pre-sanctions Mates excelled at.

That said, it also makes sense that Huawei could be finding it hard to keep up using the ‘old’ 7nm process technology as it tackles the move to ‘AI with everything’. So two steps forward, undercut by the ongoing one step back (in the form of sanctions) seems about right.

– Ian Scales, Contributing Editor, TelecomTV