Huawei’s speed of life and death: grinding core under the Sino-US technology competition

Huawei’s speed of life and death: grinding “core” under the Sino-US technology competition
“Survival is Huawei ‘s current theme.”Two days after the US’s export control measures on the company were substantially upgraded, Huawei finally responded for the first time.On May 18th, at the 17th Analyst Conference of Antiques at the headquarters of Bantian, Shenzhen, Huawei ‘s rotating chairman Guo Ping delivered a keynote speech and solved the external problem.However, Guo Ping had previously discussed the impact of this upgrade of regulatory measures on Huawei, but instead turned more topics to the impact of regulatory measures on the global ICT industry.He said that the split between the standards and the industrial chain will not benefit any party, and will have a serious impact on the entire industry, such as supply chain risks.In another part of Huawei’s statement to the media, Huawei mentioned that many Huawei companies affected by this rule change will have a serious impact on related industries around the world.”In the long run, the trust foundation for global cooperation in industries such as chips will be destroyed, and conflicts and losses within the industry will be further intensified.”Using its own technological advantages to suppress other countries’ enterprises will surely reduce the confidence of other countries’ enterprises in using American technology elements, and it will ultimately hurt the United States’ own interests.”After the analysts’ meeting, Guo Ping sent an internal letter to all Huawei employees, saying,” The suppression of Huawei by the United States is long-term and continuous, and we will also survive and seek development under adversity for a long time. “He said that at this difficult time, it is even more necessary for all employees to strengthen their confidence, do their jobs in a down-to-earth manner, continue to struggle, and overcome difficulties with the company.Huawei’s job search survival: inventory increased by more than 70% of the final reorganization code of 60 million lines. On May 16, last year, Huawei was classified as an “entity list” by the US government. Afterwards, it was repeatedly extended to obtain temporary licenses, but it affected the company’s performance.obvious.Guo Ping said that the entity list has a great impact on Huawei’s business. In fact, the company’s business plan was not realized last year, with a distance of about 12 billion US dollars.”Although you see a quarterly growth, the (growth rate) continues to be interrupted at the same time, which can grind the impact, especially when Huawei obtains each contract, it is also more difficult than before.”” For this year’s performance, Guo Ping said that there are still many situations that are not clear. The company is still making specific assessments and has not clearly judged the subsequent business development.He said that Huawei, as an ICT equipment and terminal company, can do product design and integrated circuit design, but for many capabilities beyond design, the company does not mean, “We are trying to find out how we can survive.”In the first quarter of this year, affected by the new crown epidemic and the list of entities, Huawei ‘s sales revenue only increased by 1 per year.4%, net profit increased by 7.3%, about 8% in the same period last year.Guo Ping said that in order to “fill holes” last year, the company had a significant increase in R & D and inventory.According to the data released by Huawei on the spot, the R & D investment and the average value of inventory for unconventional reasons increased significantly last year, of which the R & D investment continued to increase.8%, inventory increased by 73.4%.In addition, Huawei has funded more than 1.50,000 people, re-written and designed more than 60 million lines of code and more than 1,800 single boards, and procurement code inspection1.60000.After a year of adjustments last year, Huawei stepped forward in the de-Americanization of the industry chain-firstly launched the self-developed operating system Hongmeng before the suspension of Google services, and then no longer used U.S. parts on 5G substrates, Mate30 seriesThe US component content of the P40 series of high-end models has replaced the new low, and the P40 series is the first to launch HMS (Huawei Mobile Service) to replace Google GMS.Instead, the US Department of Commerce’s export controls on Huawei have been upgraded to a higher level.According to the new rules, Huawei and its branches included in the list of entities have produced direct products based on US software and technology from the inventory list, and direct products based on Huawei design specifications that are produced using semiconductor equipment in the regulatory list outside the USThe product needs to apply for a license when restructuring to Huawei and its branches.This means that Huawei cannot fail to import components from US manufacturers. Equipment or manufacturers that include US technology also need permission from the US Department of Commerce to produce chips for Huawei.Although Huawei has turned the design side of the chip to self-developed or non-US suppliers in the past year, the manufacturing side is still highly dependent on TSMC, especially the Kirin chip used on smartphones, which requires TSMC technology to achieve mass production.However, there is a clear difference between the technology level of SMIC and TSMC, and it cannot be replaced at the manufacturing end for the time being.China-U.S. Technology or existing decoupling: the trend of domestic substitution of semiconductors is obvious. Since the new rules have just been introduced, Huawei ‘s failure to respond to the release of control measures will have a substantial impact on the company ‘s business. However, the capital market has responded quickly.There has been a plunge on Friday. On the 18th, AAC Technologies, Sunny Optical, BYD Electronics and others fell collectively, while domestic chip stocks such as SMIC have been sought after by funds.The market generally believes that after the US’s export control on Huawei is further upgraded, it will force the domestic semiconductor industry to gradually grow, and eventually Sino-US technology decoupling may occur.Guo Ping pointed out that the split between the standards and the industrial chain is not good for any party, and will have a serious impact on the entire industry, including the split of the standard series, the customer’s supply risk and the destruction of the global cooperation trust foundation, and the intensification of industrial conflicts.”In the 2G era, multi-standard U.S. operators, through U.S. telecommunications equipment manufacturers, eventually no longer have a leading position in the competition and are declining. The United States has had such a lesson.In Europe, through the unification of GSM standards and the integration of GSM, European operators and manufacturers have obtained great benefits.”Guo Ping said.He said that what happened to Huawei in the past year has left many companies and even the country with a single supply system. At the end of last year, there were more than 1,000 companies in the US real economy, many of which were new technology companies.Many countries and enterprises have some additional costs when choosing ICT suppliers.Guo Ping revealed that the compound annual growth rate of Huawei ‘s purchases over the past 7 years has reached 27%, with purchases from US suppliers reaching as high as US $ 18.7 billion.He specifically mentioned that if the US government permits it will continue to buy products from US companies, but it will also shut down and cultivate other suppliers even more.In the semiconductor industry, the United States is the world’s leading semiconductor power.Gartner’s data shows that in 2018, American semiconductor companies (including integrated equipment manufacturers that design and manufacture products in their own factories, as well as fabless design companies that manufacture their chips independently from each other) provided about48% of the shares.In fact, the US domestic market accounts for less than 25% of global semiconductor demand, and about 80% of its industry revenue comes from sales to export markets including China.According to data from the US International Trade Commission, China accounts for about 23% of global semiconductor demand. In terms of value, semiconductors are the fourth largest US export product in 2018, second only to aircraft, refined oil and crude oil.CITIC Securities pointed out in a research report on May 18 that American manufacturers currently account for 40% of the semiconductor equipment market. Among them, in the key processes of deposition, etching, ion implantation, CMP, cleaning, and inspection, applied materials, Pan Lin,American manufacturers such as Ketian have leading technology advantages and stability. After long-term mass production inspection, they are difficult to replace in the short term; in terms of EDA software, the EDA tools designed by IC are still basically made by Cadence, Synopsys, Mentor, three American companiesSovereignty can never be completely replaced.In fact, the U.S.’s inclusion of Huawei on its “entity list” also harms the U.S. semiconductor industry.According to the “How Restriction of Trade with China Will End the Leadership of the US Semiconductor Industry” released by Boston Consulting in March, it is assumed that the US “completely terminates the interconnection technology trade and decouples technology from China”.Withdrawing from the Chinese market, its global market share fell by 18%, global revenue fell by 17%, and R & D investment fell by 30% to 60%.As the United States upgrades its control measures, the domestic semiconductor industry has also entered an active preparation stage.SMIC issued an announcement on May 15 stating that it is SMIC South will receive the National IC Fund Phase II and Shanghai IC Fund Phase II capital injection, and its registered capital will increase from US $ 3.5 billion to US $ 6.5 billion. Future 14nm wafersThe sufficient production capacity is now 6000 pieces per month to 3 per month.50,000 pieces.This move is particularly important when TSMC is going to set up factories in the United States.It is reported that Huawei has recently applied SMIC’s 14nm process foundry Kirin 710A chip to the Honor Play 4T mobile phone. The market expects that Huawei will have more orders to switch to SMIC, so the company needs to actively increase wafer production capacity.However, these are that the current SMIC process can not be compared with TSMC, another 5nm process chip has been the first mass production, and is actively researching the 3nm process, SMIC 14nm process chip can not meet the requirements of high-end business.Sauna, Ye Wang Lu Yifu editor Li Weijia proofreading Yang Xuli