As Everything Goes Pear Shaped For Huawei Sony & Samsung Plead Their Case
Banned Chinese Company Huawei who are desperately splashing the cash with retailers just to get their products ranged is days away from a bleak deadline that could see demand for their products come to a juddering halt.
While brands such as Sony Samsung want to cuddle up to banned Chinese Company Huawei and have sought urgent U.S. approval to restart supplies of components most US tech Companies face being penalised for supplying the Chinese Company because of the threat that their products pose.
As one observer said “You would be mad buying a Huawei notebook” after the Company forked out thousands for isle end displays.
In less than 24 hours’ time the world for Huawei Technologies will change — and its rise as the world’s biggest smartphone and telecom equipment maker over the past decade is set to end.
After midnight on Sept. 14, all its non-American suppliers across the world will have to stop shipping to Huawei if their products contain U.S. technology. Those suppliers will need a license from the U.S. Commerce Department if they want to maintain business with the Chinese tech champion, according to the department’s export controls imposed on Aug. 17.
In danger are components vital to Huawei’s operations: from key semiconductors to displays to camera lenses from Sony, and even printed circuit boards.
Huawei has been stockpiling all kinds of chip inventories since the end of 2018 as a result Australians are facing short supply of TV’s, notebooks and even headphones that need processors to perform.
“Electronic devices are very complicated,” said Wu Chia-chau, chairman of Nanya Technology. “Without any one of the components, you could not assemble complete devices — smartphones, laptops, or base stations.”
Currently he heats is also being felt in the market for DRAM processors, which are needed in most kinds of electronic devices.
Research by Nikkei found a spot price for benchmark 8-gigabyte DDR4 type chips was around $2.95 as of Friday, 7% higher than a recent low at the beginning of the month.
According to a source at one semiconductor trading house, “Huawei is buying up in a last-minute procurement,” as Washington’s chip embargo approaches.
However, there are obvious risks for some companies of a sudden drop in sales after they can no longer ship to Huawei.
There were no indications this weekend that the applications of Samsung and Sony had been approved.
Without Commerce Department approval, Sony and Samsung face a risk to their earnings. The two companies supply components for products, such as 5G devices, that have become caught up in the high-tech race between the U.S. and China.
Sony ranks as the world’s top supplier by market share of image sensors for mobile phones. Huawei is estimated to account for about a fifth of the Japanese company’s roughly 1 trillion yen ($9.5 billion) in image sensor sales, making it the second-biggest buyer, after Apple.
Sony in August forecast a 45% decline to 130 billion yen in the sensor segment’s operating profit for the year ending March 2021. The company attributed this slump mainly to a drop in smartphone sales during the coronavirus pandemic, but analysts say the image sensor earnings outlook could see further downgrades as a result of the escalating U.S. crackdown on Huawei.
Intel is among a few U.S. chipmakers that have secured licenses to supply Huawei with components for personal computers. But U.S. restrictions on Huawei’s access to technology for telecommunications — an area where Washington has identified China’s rapid advances as a threat — are expected to become tighter.
Lawyers said that because the U.S. has further amended its export control rule, companies with licenses to ship to Huawei will need to renew the approval. “Even if a company has a license to enable it to engage in activity covered by the May 2020 rule, it will need to obtain a different license or a modified license if it proposes to engage in activity that is covered by one of these new rules,” said Harry Clark, partner of U.S. law firm Orrick.
Huawei has been forced to use its Kirin series of chips, which power its flagship smartphones, this local Chinese innovation, is likely to be wiped out by the U.S. ban. Huawei also said this week that it would start to use its own HarmonyOS 2.0 on its smartphones from next year, suggesting that Huawei no longer expects to resume its collaboration with Google, and acknowledged that the shortage of chip supplies would affect its smartphone sales.
Huawei has already suffered in the European market, where its sales dropped 16% in the April-June period, while Samsung and Xiaomi enjoyed 20% and 48% year-on-year growth, respectively, according to research company Canalays.
“Samsung has been quick to capitalize on Huawei’s U.S. Entity List problems, working behind the scenes to position itself as a stable alternative in conversations with important retailers and operators,” a Canalays analyst said in a research note.
Donnie Teng, an analyst with Nomura Securities, said Huawei’s mobile business faces huge uncertainties.
“For its upcoming flagship smartphone — known as Mate 40, its most important model to take on iPhones every year — Huawei has become very conservative on the outlook,” Teng said. “We expect Huawei to start losing shares even in China … after Sept. 15,” he added.