The revocation of Intel and Qualcomm's export licenses to Huawei, and the new round of sanctions, will have a big impact on Huawei

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2024-05-08 21:00Published in Guangdong science and technology creators

Huawei is facing another round of sanctions.

According to the Observer, on May 7, Bloomberg, the Financial Times and Reuters and other foreign media quoted news that the Biden administration further tightened export restrictions on Huawei on the same day, revoking the licenses of American chip companies Qualcomm and Intel to sell semiconductors to Huawei.

And according to Reuters, last month, Huawei released its first AI-enabled laptop, the MateBook X Pro. Because the computer is equipped with Intel's new Core Ultra 9 processor, US Republican lawmakers criticized the Commerce Department for "giving the green light" to Intel's exports to Huawei.

The U.S. Commerce Department confirmed to the Financial Times on the same day that it had "revoked some of its export licenses to Huawei," but did not say which U.S. companies would be affected.

Judging from Reuters' statement, this round of sanctions is aimed at Huawei's PC business lines such as laptops.

Why does the United States focus on Huawei's PC business?

First of all, the United States has failed to sanction Huawei's mobile phones, from blocking overseas markets, suspending external technical cooperation, and jointly cutting off upstream raw materials and chip manufacturing equipment (lithography machines) in overseas supply chains, all available means have been used, but the results are contrary to the expectations of the United States, Kirin 9000s was born, from the perspective of Huawei Pura70 series, the core components in the field of mobile phones have basically been localized, Kirin 9010 continues to iterate, IPC improvement is rare, and further upgrades have been made in performance and energy efficiency.

In the field of smart phones, the five-year sanctions not only did Huawei not die, but also pulled up the entire mobile phone supply chain, and the United States also raised Huawei's brand premium and technological influence in the high-end market.

Huawei's terminal business has two cash flows that are mobile phones and PCs (notebooks, tablets), and mobile phones can't sanction them, so they focus on Huawei notebooks, after all, PC business also involves AI chips. Intel and Nvidia also have PC/notebook businesses, which correspond to CPUs and graphics cards.

The reason why there is still a supply of PC processors starts from the fact that the United States added Huawei to the trade restriction list in 2019, and Huawei's suppliers at that time needed to obtain a license before shipping. At the time, Huawei's suppliers, including Intel, had obtained billions of dollars worth of licenses to sell goods and technology to Huawei, allowing Intel to ship CPU for its laptops to Huawei since 2020.

The growth momentum of Huawei's PC business has caused concern in the United States. In 2020, Huawei's market share once reached 16.7% with only thin and light product lines. Later, the United States tightened sanctions, and even Intel chips were not sold or sold less, but despite this, Huawei's PC business still showed a strong growth momentum.

According to the latest data released by Canalys, the shipment of PC (excluding tablets) in Chinese mainland in 2023 will be 41.2 million units, a year-on-year decrease of 17%. Among them, Lenovo, HP, Dell, and Asus all fell to varying degrees, and only Huawei grew by 11% annually among the top 5 manufacturers.

Although Huawei is not in Qualcomm's top 10 customer list now, it is not in Intel's top customer list. However, Huawei's PC business can't be low-key if it wants to, and it is currently sitting in a state of three hopes.

Therefore, Lao Mei looked at the shipments and strong momentum of Huawei's PC business, and he couldn't calm down. Currently, Intel only supplies PC chips to Huawei. Last month, Huawei released its first AI-enabled laptop, the MateBook X Pro, powered by Intel's new Core Ultra 9 processor. The Ultra processor is positioned in the thin and light version and the workbook, adopts a new separate architecture design, and makes a new upgrade to the CPU and GPU, and also adds the NPU AI engine, so that the AI performance of the processor has been improved by leaps and bounds, which may have stimulated Lao Mei.

In the short term, this round of sanctions, or will affect the market share of Huaweix86 notebooks, x86 notebook prices and profit margins, although compared with the mobile phone business, is not high, but it is also an extremely important profit cash flow, according to this rise, Huawei is likely to win the first PC in the Chinese market in the next 2~3 years.

Therefore, blocking the notebook business in time limits the growth of Huawei's terminal profits, which leads to the growth of R&D investment, and prevents Huawei from catching up too fast in the field of AI chips, so as to maintain the leading edge of manufacturers such as NVIDIA.

In essence, the other party knows that Huawei will make a breakthrough in the field of AI sooner or later, in this case, it is better to suppress your PC profit acquisition through sanctions, delay your breakthrough speed, and reduce your R&D investment level.

Huawei's mobile phones can offset this part of the impact, but the problem is that due to the weakness of the entire mobile phone industry, it is not realistic to achieve explosive growth at present. Therefore, this is still a big impact on Huawei, and Huawei needs to think about how to deal with it.

In the short term, it may affect Huawei's notebook shipments, performance, and market share

Therefore, this round of sanctions, in the short term, will definitely affect the market share of Huawei's PC business, previously, MateBook 16S was restricted very uncomfortable, in recent quarters, Huawei's domestic notebook business in the second and third positions swinging, after this round of sanctions, Huawei can sit on the two, remains to be seen.

After Intel was broken, Huawei's possible choice is to turn to the ARM ecosystem and build a set of software and hardware systems based on the ARM architecture from the processor and HarmonyOS system to cope with this wave of impact. This short-term adjustment is difficult, but I don't know if Huawei has made sufficient preparations in advance.

On May 15th, Huawei will also hold a summer all-scene new product launch conference, although many consumers said that they are looking forward to seeing the use of Kirin 9200C or Kunpeng 930s in Huawei's flagship stores and authorized stores across the countryMateBook, but it is not yet known how many new products will be affected by this policy, and if there is no alternative, the next new product shipments may be affected.

In addition, for computer notebook products, CPU is the key to performance, and if alternative products cannot keep up in terms of performance, Huawei's notebook sales will also be affected to a certain extent. This may deal a short-term blow to the market share and profit of Huawei's PC business.

In the long run, it will force Huawei to promote the progress of Kirin + HarmonyOS PC faster

However, in the long run, Huawei is forced to accelerate the progress of Kirin + Hongmeng PC. The question is, does Huawei have the ability to develop its own AI PC CPU? According to the analysis of industry insiders, this possibility exists - Kirin 9010 large core * 4 + medium core * 4, and then stack GPU + NPU scale, increase frequency, can meet the light and thin market, if the Core core, process iteration, continue to pile scale, and make a Pro book is no problem. But it will take time.

Now that the Kirin 9000S has been mass-produced, it is expected that from 2024, Huawei will stop purchasing Qualcomm chips, and the new models will fully use the new Kirin processors of their own design.

In fact, after the development of Xinchuang in recent years, the domestic PC ecology has basically adapted various popular software with various architectures under Linux. Everything is ready, only the east wind is owed.

In the past two years, Huawei's mobile phone is recovering, and the PC business is growing strongly, which has contributed to Huawei's continuous growth in profits and is also an important support for the growth of its R&D investment, which was as high as 164.7 billion yuan last year, accounting for 23.4% of the annual revenue.

Now the rebound momentum of the mobile phone business can not be suppressed, the United States has targeted the ordinary semiconductor market, to cut off the profits of Huawei's PC business, it forced Huawei to put more energy into the PC market chip solutions, restraining Huawei's investment in more advanced artificial intelligence chips, lithography machines and other key areas.

It's a game of time

At present, the most important card in the hands of Lao Mei is to take the lead in the field of AI chips, and it is very important for them to delay Huawei's acquisition and R&D capabilities in advanced chips.

In terms of consequences, as the Wall Street Journal bluntly said in March last year, the revocation of existing licenses could have a significant impact on U.S. chip producers, which would deprive chip companies of revenue from funding domestic R&D.

This is a game about time, the United States restricts Huawei, in the fight for its own time, Huawei's investment in the business involves the competition for future technology dominance, and Huawei also needs more time to break through, but, for Huawei, the most difficult time has passed, and now what is the pressure on the notebook? Once the replacement and adaptation of HarmonyOS + Kirin in the PC market is solved, Intel chips will suffer a heavy blow.

Now many consumers are waiting for the release of Kirin chips and desktop operating systems, which may also be a matter of time, we will wait and see.

Author: Wang Xinxi, Senior Reviewer of TMT This article is not reproduced without permission

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