Huawei inventory & component sales

Huawei is stocking on many parts for protection against the US. With over US$30 billion in cash, it can afford to carry a reserve inventory. When I look at the primary suppliers, it’s not clear Huawei is buying all parts. The most advanced chips come from TSMC. Sales are up, but not drastically.

Huawei since the beginning of the year has bought RF front end modules from top US suppliers in large volume. I could see that from the financials of Skyworks and Qorvo. I’d guess it is also gobbling FPGA’s the other major component where the US is dominant.

Digitimes, a generally reliable source, worries

Chinese smartphone vendors, particularly Huawei, scrambled to stock up components in the second-quarter of 2019 amid escalating US-China trade tensions.

Such precautionary orders sharply boosted second-quarter smartphone AP shipments, but are set to undermine shipments in the third quarter, according to Digitimes Research’s latest China Smartphone AP quarterly report

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Sept 19 for Intel-killer Kunpeng (First Look)

Taishan X6000 board

Huawei is selling US$billions in servers and cloud services. Almost all are dependent on Intel processors, a dangerous situation. HiSilicon has been making network processors for years and will unleash a killer chip on Sept 29.

The 64 processors in the Kunpeng 920 will solve that problem. The performance should be comparable to Intel or AMD’s best, according to some early benchmarks.

The board was announced in April and isn’t new. Until now, it has been little known outside the company. It uses ARM cores, which have an attractive performance per watt compared to Intel.

Sept 19, Taishan & Kunpeng will come out to the world at Huawei’s Shanghai event. Hou Jinlong, President, Cloud & AI Products & Services, will keynote with Leading New Computing with Kunpeng. He will be followed by CEOs and other senior executives from China’s top companies.

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10M Huawei phones sold in China July

Huawei continues to gain share in the Chinese mobile phone market, taking about a third of the sales in July. About a million P30 Pro phones sold, at a price close to US$1,000.

In the first three months of 2019, Huawei sold 60 million phones worldwide. Since then, international sales have fallen. German sales were cut in half in May.

Dan Strumpf in the WSJ sees, ” patriotic buying spree helps to blunt the impact of widening U.S. restrictions on the telecommunications giant. Huawei has also increased advertising in the Chinese market.

Xiaomi, Apple, Samsung, and “other” are faltering in China sales. Oppo & Vivo, both owned by BBK, were #2 & #3 in the market. Their combined sales have been roughly matching Huawei this year.

Huawei sold a million Mate 20 Pro 5G phones in the first half of August, augering well for continued high sales.

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Topping Google salaries to hire 500 in Russia

Ren Zhengfei “Will pay even more than Google to attract talent to work on innovation in Russia. Students from the Novosibirsk State University have been the champions or runners-up in the International Collegiate Programming Contest for six consecutive years. Google paid salaries five or six times higher than normal to employ them. We will join the competition for talent.”

Huawei is opening three new research centres in Russia and plans to staff them with 1,000 engineers. 500 will be hired in the next year. Huawei is developing enormous resources in Russia and making large deals for equipment.

Huawei will build a 5G network for MTS, Russia’s largest mobile phone carrier. It has 100 million customers, more than any other European network has in one or two countries. Xi and Putin came together when the deal was announced.

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500 Mbps in Korea drive test

LG in Korea has used Huawei radios to cover 40 kilometres with 5G. Huawei reports that cars driving at 60-80km/h could get speeds of 500 Mbps or higher.

Drive testing is an art with many unknowns, Rootmetrics told me recently as we reviewed its data from Korea. The speeds Huawei claims in moving cars are reasonably consistent with the outdoor speeds in Rootmetrics Korea testing. Korean 5G speeds tested: 160 Mbps to 457 Mbps median

This is the first story I’ve picked up from www.weibo.com/huaweiweibo? . I can read it easily with Google translation.

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One million sold in 15 days! Mate 20 5G demand taking off

August 2nd, Huawei began selling the 5G phone, online only. By August 15th, sales topped 1,000,000. On August 16th, lines formed around stores in several cities as sales began offline. Huawei will probably sell 7 million to 12 million 5G phones in China this year, replacing many of the lost sales in Europe.

ZTE and others are also selling phones, with Oppo committed to a price of US$580. The telcos have just begun offering phones in their shops. Two million signups in August are almost certain. China and Korea will likely each reach three million signups in September. After that, a wide gap will develop.

When Minister Miao told the Chinese telcos not to wait for October for 5G, the companies were not prepared. Over 50,000 radios were in place, but basics like price plans didn’t exist.

For now, all customers are on a free 100 gigabyte/month “experience” plan. The rumours are that prices will be 199 to 599 yuan, US$29 to $85 per month.

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$400-600 5G phones in 2019

Consumer CEO Yu Chengdong August 9th promised 5G midrange phones in 2019. He didn’t specify a price, but Oppo is selling a premium quality phone in China for US$580.

For US$290, I can buy an unlocked 4G Huawei P30 Lite (128GB, 4GB RAM) 6.15″ Display, and a triple camera.

The 5G version might cost Huawei $40 more to manufacture. The marketing department will set the price based on competition. Huawei would make money at $400.

He repeated Huawei’s expectation that the price will fall to less than $300 in 2019.

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Android-killer looks good

4-5,000 people on working to build Harmony, Huawei’s new operating system that works on all your devices and most Android mobile phones. There’s no test data available, but the specifications suggest it outperforms Android.

Harmony is running on the Honor Vision, a 55″ 4K connected TV that Huawei prefers to call a “smart screen.” The features, which look interesting are in the release below.

It can also run on most Android phones and will replace Android if the U.S. problems continue. It’s rumored to be testing widely on mobile phones in China. Ren has said he is ready if the U.S. forces his hand but would prefer to stick with Google.

Android works well with millions of apps. Huawei has put a billion dollars on the table for application developers. WeChat, TikTok, and tens of thousands of applications are already being ported for the Chinese market. It will take time for the Westerners to jump in.

About a third of mobile phones are in China, enough of a base to support an extraordinary ecosystem that will more than match most of the West. However, fear of problems has scared off many western buyers of mobile phones; sales will be down 20M to 50M this year if the boycott continues.

Harmony is almost certainly superior to Android because software has advanced enormously in the decade since Android came out.

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Huawei making RF radio frequency parts

“Huawei was using several RF parts from HiSilicon in the Mate 20 5G, which surprised us. We hadn’t seen that before.” Tech Insights examines thousands of devices each year to help the industry understand the latest advances.

The best, smallest radio frequency parts come from U.S. manufacturers like Qorvo & Skyworks. The first 5G phones support ~35 different frequency bands at high speed. Phones like the Galaxy 10 5G already have a problem on very hot days; the RF amplifiers need to be very power-efficient.

CEO Bob Bruggeworth of Qorvo estimates Huawei can now produce about 30% of the RF parts it needs.

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$400M in parts inventory, four month+ supply

Joe Madden, a well-informed analyst, writes,

During late 2018, Huawei started ramping up their purchasing of key semiconductors for their 5G base station platform. By May 2019 [Huawei] had inventory equivalent to 100,000 additional base stations using 64T64R MIMO. 

Yes, that’s a pile of 20 million amplifiers and millions of FPGAs. It’s a commitment of at least $400 million for “extra” inventory, in addition to their immediate production requirements.

FPGA’s (Field Programmable Gate Arrays) are designed to replace a circuit board with a single, easily configured chip. They are the right choice for the initial design and any product that’s not being sold in high volume. As product volume goes up, they are usually replaced with a dedicated chip, an “Application specific integrated circuit.”

Xilinx and Intel/Altera, both U.S. companies, dominate the top of the market.

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$1.4B new Shanghai centre for 30,000 researchers – with apartments

Looks idyllic

“Come work for Huawei and we’ll give an apartment!” New graduates have a terrible time finding housing, especially in Shanghai or Beijing. Ren has decided to compete for the best talent in the world. The apartments going up in the Shanghai Qingpu research park will lure some of the best to Huawei.

In China, the company is offering a handful of top PhDs as much as US$300,000. Huawei, Tencent, Alibaba, Baidu and the other Chinese giants are competing for graduates. It is hiring 15,000 this year.

Huawei has 15 large research centres around the world, backed by a huge R & D budget. It is the only company in communications that is investing heavily in basic science.

Why Shanghai when headquarters are in Shenzen? The company didn’t say, but I’d guess the nightlife is much livelier in Shanghai.

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300,000 5G Mate 20’s sold in first five days

Huawei is selling the high end 5G Mate 20 in China for RMB 6199 (US$880.) That’s only about $30 more than the 4G version. Who would want to buy a phone likely to be obsolete in a year or two to save $30?

The first delivery isn’t until August 16. Over 1 million will be sold by the end of August in China alone. The Mate 20 is a high end, 7.2″ phone that produces extraordinary pictures. (Specs below)

Huawei is using its own Kirin 980 + Balong 5000 chips for 5G and is also producing some of the radio frequency components. That brings down the difference in the bill of materials cost. I would guess Huawei only spends about $30 more in parts for the 5G.

This isn’t the cheapest 5G phone in China. Oppo is priced at RMB 4,000 yuan (US$580.) ZTE’s Axon10 Pro 5G version is priced at RMB 4,999 and is already delivering.

The only thing likely to hold back sales of the Mate 20 are the rumours that the P30 will have a breakthrough camera with a super-large sensor.

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