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90% of Huawei U.S. purchases can be rapidly replaced.

D.C. has a fantasy that the world stops at Washington’s command. The U.S. is ahead in a handful of high-tech fields, but fewer and fewer. My research shows that about 90% of the purchases from the U.S. can be replaced within months from other parts of the world. Update 5/22. British company ARM blocked Huawei from using Arm designs for future 5G & AI chips. This could be a major problem. Update 6/17 Huawei and China are well on the way to replacing Android, ARM, and RF chips. The only thing that’s biting is the Google blockade, costing tens of billions in phone sales.

For example, Huawei buys memory chips from Micron in the U.S. It could buy similar chips from SK Hynix in Korea, Toshiba in Japan, and imminently Yangtze Memory in China. Many of the most important parts already come from Asia, including screens for mobile phones. 

The hardest to replace will be RF for phones, advanced optics, FPGA’s, and chip design software. Here are some details and possible solutions. 

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Dave in Washington Post

Jeanne Whalen was kind enough to include me in her article. (Might have paywall)

“Unlike ZTE, Huawei makes some of its own semiconductor chips, and Huawei can tap alternative, non-U.S. suppliers for some parts and technology, analysts said. “There are very few [parts] they can’t just buy from Japan or Korea or France today,” said Dave Burstein, a telecom analyst for STL Partners who recently began publishing Huawei Report & News.

Huawei also has about $38 billion in cash and short-term securities it can tap to weather the storm, Burstein noted. And recent quarterly earnings reports from some U.S. tech firms have suggested that Huawei may have been stockpiling parts before the White House ban, in anticipation of a possible blockade, Burstein said.”

In a few minutes I’ll post “90% of Huawei U.S. purchases can be rapidly replaced,” after I fix a few things. It has the explanation and backup for what I say here.

He Tingbo, HiSilicon, “Prevail no matter what.”

Ms. He runs a US$8 billion chip company

“Many years ago, when everything was going smoothly, the company made ultimate survival assumption that one day we might have no access to any advanced chips and technology from U.S

“We have courage, wisdom and tenacity to conquer and prevail in the end! Storms ahead is the time we show our true heroic nature, no matter what, we can build our own Noah’s Ark”.

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90-day exemption: The official word from the U.S. Gov

Can Huawei use U.S. parts for 90 days for equipment in place in Europe? News reports suggest the 90-day exemption only applies to U.S. rural carriers. But the plain language of the announcement does not say it is only U.S. carriers and mentions “foreign carriers.”

Based on the official announcement, it appears Huawei can order parts for European customers as well. IANAL. I would suggest any U.S. company selling to Huawei check with a good attorney.

Trade enforcementFOR IMMEDIATE RELEASEMonday, May 20, 2019

Department of Commerce Issues Limited Exemptions on Huawei Products

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Huawei’s ownership by trade union committee

Christopher Balding and Donald Clarke have published a paper with interesting details of Huawei’s ownership. They confirm that the profits not reinvested are distributed among the employees.

“The Huawei operating company is 100% owned by a holding company, which is in turn approximately 1% owned by Huawei founder Ren Zhengfei and 99% owned by an entity called a “trade union committee” for the holding company. … What have been called “employee shares” in “Huawei” are in fact at most contractual interests in a profit-sharing scheme. “

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Apple could buy Huawei 5G modems

Intel, Apple’s preferred supplier, has missed important delivery milestones on 5G modem, according to UBS analyst Timothy Arcuri, but denied by Intel. If so, Apple could turn to Huawei, Engadget suggests, citing a source that sounds like a Huawei leak.

Huawei is now the largest chip designer in China, with sales in the billions. It is actively selling some chips, such as high end TV processors, to others. As far as I know, Huawei hasn’t offered any 5G chips.

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Huawei the most transparent big telco supplier

One of the most information-packed events of 2019 will be April 16-18 in Shenzen. Huawei will bring two dozen of their top executives first for presentations and after for questions from some of the best analysts in the world. While other companies avoid tough questions, Huawei does its best to answer almost everything. Of course they are enthusiastic about their products, but they stay closer to the facts than almost anyone else in the business. I wish it were practical for me to go.

Huawei got almost unbelievable support from the Western press when it was attacked by the U.S. One reason is that the U.S. never provided any evidence, leading many to infer the U.S. had no substantial facts. A second reason is that those who have worked with Huawei – I’ve reported about Huawei since 2004, when BT’s Paul Reynolds told me to take a look – have learned they are at least as trustworthy as their Western peers.

Huawei several years ago made the strategic decision to be open and transparent in a way almost none of the Internet giants are.

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HiSilicon as #1 Asia chip designer

HiSilicon revenue in 2018 was US$7.6 billion, growing rapidly. Digitimes expects it will soon pass struggling MediaTek. Chipmakers with massive plants (Samsung) have large sales volume, but HiSilicon is #1 in design-only fabless vendors.

90% of HiSilicon’s chips go to Huawei but it is branching out. The AI and Network Processors are natural for a high-end TV, like the pictured 8K Sharp. (Huawei is releasing a TV line as well, with sales projected at 10,00,000.)

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Huawei sales up 36% in Jan & Feb

Trump has lost his war against Huawei, as most engineers predicted. Britain, Germany, India and even Australia are not banning Huawei, although they’ve imposed some restrictions. (NYT)

Huawei sales are not just up, but increasing far above forecast. Some may be customers stocking up to avoid shutdowns, but most is genuine demand. If Huawei growth continues at even 18% the rest of the year, 2019 sales will top US$130 billion.

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