Source: Semiconductor News (ID: MooreNEWS)
Compiled from Nikkei Shimbun
According to Nikkei, the dismantling of Honor's latest model of smartphones shows that parts made by American companies account for 40% of the manufacturing cost of products. The brand, which originally belonged to Huawei Technologies, has since broken away and turned to U.S. suppliers.
Nikkei unraveled the phone with the help of Tokyo-based research expert Fomalhaut Techno Solutions. Calculate the estimated price of the internal components to calculate the relative share of the production of the equipment in different countries.
In the Honor X30, a 5G smartphone launched in December 2021, the share of U.S. components soared to 39% from 10% of Huawei-made 30S models released in 2020.
Most of the X30's core components, including processors and 5G chipsets, are supplied by U.S. manufacturers such as Qualcomm rather than by Chinese suppliers such as HiSilicon, Huawei's chip development arm. The findings suggest that China is working to develop state-of-the-art electronics for its smartphones.
Honor spun off from Huawei in November 2020 to evade U.S. Commerce Department sanctions that prohibit parent companies from using key U.S. technologies such as microchips and operating systems.
Honor sells its products mainly in China, and the separation from Huawei has saved the company from many sanctions.
Honor's mass-market smartphone X30 has an estimated production cost of $217. U.S. modules account for the largest share of costs, accounting for 39% of total costs. This is a strong increase of 29 percentage points from Huawei's 30S launched under the Honor brand in the spring of 2020. In most core areas, including main processors and 5G chipsets, U.S. components have replaced Chinese components.
At the same time, the share of Chinese components fell by 27 percentage points to about 10%. HiSilicon offers a system-on-chip (SoC), 5G chipset, and power management chip for the 2020 Honor phones. Other Chinese manufacturers and Japanese suppliers, including Murata, Sun Power and TDK, are also involved in the 2020 model 30S communications chips.
But HiSilicon is no longer one of the suppliers of these components of the X30. With the exception of The Japanese parts, all communications chips for the latest models are supplied by Qualcomm and Qorvo, another major component manufacturer in the United States. The only Chinese communication chip component used is a communication signal amplifier based on old technology.
The sharp expansion in the use of U.S. parts could mean honor can't ensure an adequate supply of cutting-edge smartphone parts made in China.
In August 2020, the United States imposed sanctions restricting any foreign semiconductor company from selling chips developed or produced using U.S. software or technology to Chinese technology groups without a license, thereby cutting off Huawei's access to important advanced computer chips.
This move also makes it difficult for Huawei to purchase products from TSMC, the world's leading foundry chip manufacturer. U.S. sanctions have prompted Huawei to accelerate its inventory of cutting-edge semiconductor equipment.
Honor uses Google's Android operating system on its smartphones. The powerful combination of high-end components from Qualcomm and other U.S. manufacturers with the dominant U.S. operating system — Android, which owns 70 percent of the world's share, and Apple's iOS, a major rival to Android — creates a distinctly unmatched global ecosystem of U.S. technology for smartphones.
In response to U.S. sanctions, Huawei has been working to expand the in-house development and production of its equipment components and procedures. Denied access to Google apps including its operating system, App Store, and Gmail, Huawei developed its own smartphone operating system, called HarmonyOS. It offers an open-source version of HarmonyOS for other manufacturers, but doesn't use it in its spin-off smartphone business — Honor's X30 runs on Android.
The competitiveness of an operating system depends largely on the number of its users. Popular operating systems attract software developers and have a large and fast-growing pool of applications.
In an era when devices and applications are evolving rapidly, the contributions of vendors and software developers are critical to the product strategy of smartphone manufacturers. If a manufacturer tries to go it alone, it will most likely find itself unable to launch new products at competitive prices and speeds.
HarmonyOS is a newbie and can't compete with Android in terms of name recognition or complexity. In more than 10 years of fierce competition with Apple's iOS, Google's Android has come a long way. In addition to Honor, two other leading Chinese smartphone makers — Xiaomi and Oppo — also use Android.
Minatake Kashio, director of Fomalhaut, predicts that it will be increasingly difficult for Chinese manufacturers to procure necessary parts in the coming years.
As the international community increasingly criticizes China and therefore increasingly eschews Chinese products, chips and operating systems, it will pose a huge obstacle to the development of Chinese smartphone makers.
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