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Euro telcos back Huawei

“You really need a global, open vendor equipment market, which is needed for operators to be able to pursue a multi-vendor strategy,” ETNO’s Maarit Palovirta asserts. ETNO speaks in Brussels for giant telcos like Deutsche Telekom. Like most policy types, she rarely says things directly. It’s clear “open vendor equipment” is meant to address Huawei.

A reporter for <a major newspaper> just told me the carriers support Huawei so strongly because the service has been excellent. That’s what I hear from all the tech people, especially in Europe.

Ten years ago, Huawei had to cut prices to win initial market share. That’s no longer necessary. Nokia said it actually underbid Huawei in China. The Washington Post still gets that wrong.

Palovirta really does need to rethink some of her other comments. With no new use cases developing, there’s no reason to think 5G will have an interesting economic impact. As Dean Bubley and Deutsche Telekom have pointed out, almost everything claimed for industrial 5G works fine in 4G or Wi-Fi.

Separately, the Africans and most Latin Americans continue to choose Huawei.

U.S. Commerce claims

The chip blockade will be devastating to Huawei in the short run, but China will spend whatever it takes to become independent and protect Huawei. Over $100 billion is available for chip investment.

In a few years, China will be equal to anyone in the chip business. It will win away from the U.S. tens or possibly hundreds of billions in chip sales. Huawei will survive and thrive.

It’s hired 3,000 chip engineers from world leader Taiwan by doubling salaries. Academic research is funded in the billions. Corporate research and development gets massive tax breaks.

See Gross idiocy from the Donald for how dumb the administration is about this. Here, the official announcement:

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Gross idiocy from the Donald

Years of intense effort by the world’s greatest spy agencies have found no spying by Huawei, and certainly nothing significant. But Donald Trump needs his alternate reality.

From The Hill:

Trump said to“Fox & Friends” on Monday that Huawei was able to “spy on us” through the use of their equipment in telecommunications systems, describing the company as “a disaster.”

“They used to have free reign over our country,” Trump said. “They knew everything we were doing. Huawei is really, I call it the ‘Spy-wei.’ What happens is Huawei comes out and they spy on our country. This is very intricate stuff. You have microchips, you have things that you can’t even see. They spy.”

“With the U.K., we said, we love Scotland Yard very much but we’re not going to do business with you because if you use the Huawei system, that means they’re spying on you, that would mean they’re spying on us,” Trump said. “And I’ve gotten just about every country to drop it.” 

The Hill was irresponsible not simply calling this an outrageous lie.

Subsidized chip design companies looking to supply Huawei

Kenneth Rapoza at Forbes writes regional government chip companies have been making “Mass purchases of electronics design automation (EDA) software” according to Koki Inoue, principal researcher at the Economic Research Institute of the Japan Society for the Promotion of Machine Industry. told Nikkei in a report dated back in June

Companies headed by the muni governments in China began setting up shop to develop a new fabless semiconductor manufacturer base. These new limited liability corporations are believed to number in the hundreds across the country and were set up in a matter of months.

Inoue’s research shows a surge in local government purchases of EDA software, which then is used by the new fabless makers to make the necessary chips.

SCMP is worried that China is spending so much on chipmaking it will have overcapacity. That’s a good problem to have when chip capabilities are part of a trade war.

China will do whatever is necessary to protect Huawei,

Huawei more innovative than IBM, Facebook, or Tesla

BCG data
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In an unscientific but large poll by Boston Consulting Group, Huawei was ranked the 6th most innovative company in the world, eclipsing some of the most respected companies in the world. Its US$20 billion research budget ranks with Apple, Google, Amazon, Microsoft, and Samsung, the only companies perceived as more innovative.

Trump’s war has done wonders for Huawei’s reputation. Two years ago, Huawei was the leader in telecom but little known outside it. When the most powerful nation on earth expressing mortal fear, people outside the industry took note.

Few of the 2,500 “senior executives” surveyed are experts in innovation. Nearly none have the time for close study. They are too busy doing their jobs. There’s no absolute measure here.

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Beat the Boycott? Shifting HiSilicon Engineers to Tsinghua Unigroup/Unisoc

State-controlled Unisoc is hiring many engineers from HiSilicon, report Digitimes & Business Korea. Unisoc (once known as Spreadtrum)is already shipping a 5G chip, the T7510. It’s made in a 6nm process at TSMC. See UNISOC/Ziguang Zhanrui & Hisense: Yet Another 5G competitor.

With the additional engineering talent, there’s no reason Unisoc can’t match and reproduce Huawei’s state-of-the-art 5G and other chips. Unigroup’s other subsidiary, Yangtze Memory, employs 2000 engineers. It is producing 64 layer 3D NAND chips in volume and sampling 128 layer chips, close to the state of the art. It just broke ground on a facility designed to triple production. See Yangtze Memory proves Chinese semiconductors can be competitive. Unigroup expects to invest US$24 billion in memory chips.

Being born in Seoul or California does not mean you will be better able to design chips. HiSilicon engineers have designed chips equal to the best of Qualcomm and Intel. If Unisoc hires many of them, it will quickly be able to match almost any chipmaker.

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Massive Mediatek orders probably for Huawei

TSMC has been ordered not to sell chips to Huawei after September 1, so Huawei is finding other sources. Mediatek, #2 wireless chipmaker, already supplies certain Huawei models. It has now reserved massive capacity at TSMC to produce 7nm and 5nm chips. No other phone maker has a reason to order so many more chips from Mediatek, so they will almost certainly go to Huawei.

While Trump believes he can give orders to TSMC because some of its equipment is made in the U.S. US authority has not been extended to customers of TSMC, like MediaTek of Taiwan. Presumably, the U.S., Taiwan, and the People’s Republic are having an intense discussion behind the scenes, but so far Mediatek has not been blocked.

Huawei has numerous ways to get chips. They are reported to be discussing a large buy from Samsung. Samsung may also be able to produce chips for Huawei in a special facility that does not use U.S. equipment.

MediaTek strongly denied Japanese press reports they would just be a front for Huawei’s chips. Instead, it would sell its standard chips to all comers, including Huawei.

My Major Error: The U.S. Can and Did Block Huawei at TSMC

“I make many mistakes,” the Butler said. I make many mistakes as well in the course of writing so much and I regret every one of them. Some are careless, inevitable from a human author but worth minimizing. Some are bad analysis or inadequate understanding, from which I must learn.

Some are hubris. In 2019, I told the Washington Post that Huawei will survive and thrive despite the American attacks. For almost a year, sales actually grew while profits and cash remain high. I also was confident Taiwan would not allow crucial foundry TSMC to cut off Huawei. My comment was, “China would treat that as an act of war.”

TSMC is one of only two companies that can manufacture the 5nm and 7nm chips required for premium 5G phones. It is a critical chokepoint that worries everyone in the industry. An earthquake in Taiwan could crash the chip and technology supply chain.

I was wrong. I have the knowledge to evaluate the chips and technology. It was hubris for me to make a judgment about politics.

Huawei is already finding ways to evade the blockade. China is spending $10’s of billions to build domestic chip plants by whatever means necessary. The Chinese factories and chip design software are years behind. It would take a miracle to catch up in less than 4 or 5 years.

China has delivered many technological miracles in the last decade and I wouldn’t count them out.

B__________. Huawei is not “owned or controlled by the Chinese military.”

Reuters mis-reports ” The Trump administration has determined that top Chinese firms, including telecoms equipment giant Huawei Technologies and video surveillance company Hikvision, are owned or controlled by the Chinese military … The DOD document also includes China Mobile Communications Group and China Telecommunications Corp.”

The truth is the first casualty in a war, but Reuters editors should have known better. The question of Huawei’s ownership has often been discussed in the press. The company’s answer, that it is owned by an employee trust, is pretty clear, although the decisions of that trust are not transparent. It appears a handful of senior employees have defacto control.

Since the U.S. has targeted Huawei, hundreds of agents have investigated the company with the full power of National Security Agency tools. It’s highly likely that if the military were in control, there would be evidence found by now. I have no proof but the inference is well supported.

The claims about China Mobile & China Telecom are clearly false.

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Huawei Near the Top in Innovation

Boston Consulting Group surveyed 2500 senior business executives. Many had never thought about Huawei until the U.S. went to war, but apparently they are impressed.

Boston Consulting Group survery

Alibaba and Tencent also ranked. Chinese protection of domestic companies is apparently a good idea. Surveys like this are popularity contests and not always accurate. I’m reporting it because ITIF, a D.C. outfit, made a specious claim Huawei was not innovative. Beltway blindness.