The impact of the U.S. government's revocation of Huawei's export license and Huawei's response
On May 7, 2024, the U.S. Department of Commerce announced that it had revoked the export licenses for Qualcomm and Intel to sell chips to Huawei. The move is aimed at further restricting Huawei's access to U.S. semiconductor technology and weakening its competitiveness in areas such as 5G and artificial intelligence, which Huawei is seen as the main U.S. rival in the technology sector.
This decision will directly affect the supply of chips for Huawei's mobile phones and laptops, hitting its consumer electronics business. Huawei's phones and laptops have long relied on chips from U.S. chip suppliers such as Qualcomm and Intel. Once the supply is interrupted, Huawei's production and sales in these areas will be severely impacted. According to industry estimates, if the ban is enforced, Huawei's mobile phone shipments could fall by more than 30% within a year.
In the face of this move by the United States, Huawei paid close attention to it and made a resolute response. Huawei called the U.S. approach a "classic economic bullying" and will take all necessary measures to protect its rights and interests. Huawei also said that it will not abandon its development in the field of consumer electronics such as mobile phones because of US sanctions. This shows Huawei's determination to overcome U.S. restrictions and remain competitive in the consumer electronics market through its own efforts.
People believe that although the ban will hit Huawei's consumer electronics business, it will not have a substantial impact on its main business of communication equipment. Huawei mainly relies on self-developed chips and technologies in the field of communication equipment, and has a low dependence on American chips. Even without access to Qualcomm and Intel chips, Huawei's communications equipment business can still be sustained.
In order to reduce its dependence on American chips, analysts expect Huawei to increase its own chip research and development. Under the US sanctions in the past few years, Huawei has been accelerating the process of chip independence and control. In 2022, Huawei launched its first self-designed HarmonyOS and Kirin 9000 chip for some of its mobile phones and tablets. Huawei may further expand the application scope of its own chips to cover more consumer electronics product lines.
This move will also affect the sales revenue of American chip companies such as Qualcomm and Intel in the Huawei market. According to industry data, Qualcomm and Intel's sales in the Huawei market in 2023 will be about $3 billion and $1 billion, respectively. The loss of Huawei, a key customer, would take a significant toll on their revenues. Both Qualcomm and Intel have said they will comply with U.S. government export controls.
The U.S. government's decision to revoke Huawei's export license is aimed at further suppressing Huawei's development in the technology sector and weakening its competitiveness in cutting-edge fields such as 5G and artificial intelligence. This move will directly affect Huawei's mobile phone and laptop business, but it will not have a substantial impact on its main business of communication equipment. In the face of U.S. restrictions, Huawei has shown a firm determination not to give up on the development of its consumer electronics business. Huawei will also increase its own chip research and development efforts to reduce its dependence on American chips. This incident once again highlights the tense standoff between China and the United States in the technology sector, and will also affect the business performance of American chip companies in the Huawei market.