Nearly 30% of Huawei’s 5G base station equipment comes from the United States. Who controls its fate?

As one of Huawei’s most important businesses, Huawei’s base station equipment still relies heavily on chips and components from American manufacturers. The latest teardown found that parts from US suppliers accounted for nearly 30% of the total cost of Huawei’s core 5G base station units by value. In addition, the main semiconductor devices in the equipment are all foundry by TSMC.

The Huawei baseband unit dismantled by the Japanese fomalhaut dismantling laboratory measures 48 cm x 9 cm x 34 cm and weighs about 10 kg. The motherboard shows that “Hi1382 TAIWAN” is printed on the main chip of Huawei’s 5G baseband unit circuit board. This is a chip designed by Huawei HiSilicon, and “TAIWAN” means that the chip is manufactured by TSMC.

According to the dismantling results, the production cost is estimated to be about 1320 US dollars. Among them, the main chip is designed by HiSilicon, and the cost is about 42 US dollars. The memory chip (Memory) comes from Samsung in South Korea, and the cost is about 3.2 US dollars. Cypress and Winbond Electronics in Taiwan, China, cost about $0.3, FPGA from Lattice and Xilinx in the United States, cost about $60, power management chips from U.S. TI and ON Semiconductor, cost $0.1~0.6, – The circuit protection device is from Japan TDK, and the cost is about 0.15 US dollars.

Overall, components made in China accounted for 48.2%, higher than the domestic chip share (41.8%) in Huawei’s top 5G smartphone Mate 30. The HiSilicon processor accounts for most of the cost of domestic chips. The main chip manufactured by TSMC is used for some key computing tasks. Since HiSilicon uses American technology and software in the design and manufacturing process, in The chip may not be available under the ban. In addition, the proportion of domestic chips is less than 10%.

“While key parts are provided by Chinese manufacturers, they make up less than 1 percent of the part count,” said a Fomalhaut executive. So the device remains “largely dependent on U.S.-made Components”. South Korea’s Samsung provides the second largest share of the cost of memory chips after U.S.-made components. While the parts made in Japan are not prominent, only a few Japanese suppliers such as TDK, Seiko Epson and Nichicon are found.

The third U.S. ban on Huawei, the most severe, took effect on September 15, and any unlicensed U.S. technology cannot be supplied to Huawei. As Huawei’s most important foundry partner, TSMC announced in July that it would stop shipping to Huawei after the ban took effect. Huawei’s other foundry supplier, SMIC, also said a few days ago that it “has submitted an application for an export license covering several Huawei products” and reiterated that it has always adhered to compliant operations and abides by the relevant laws and regulations of the place where it operates.

On the other hand, MediaTek, the world’s second-largest mobile chip maker after Qualcomm, also confirmed that it has applied for a license to the United States to resume some business with Huawei. It is unclear whether the Commerce Department will approve the request.

So while Huawei is working hard to wean itself off its reliance on overseas suppliers, the immediate problem is inventory.

In the global communications market, Huawei has established itself in the 3G and 4G markets, becoming the world’s leading supplier of telecom infrastructure equipment, and has gained nearly 30% of the global mobile base station equipment market, surpassing Finland’s Nokia and Sweden’s Ericsson.

By offering extremely cost-competitive products at 40 percent lower prices than competitors, Huawei has beaten the other two vendors. In addition to the Chinese market, Huawei has established a solid presence in Africa and other regions. However, U.S. sanctions could be devastating to Huawei’s base station business as well as its smartphone business. A Huawei supplier said the company had been buying a lot of parts since the spring, but had not presented any production plans since Sept. 15.

Huawei has been stockpiling key parts from the U.S. and other suppliers for its base station and smartphone business since Meng was arrested in Canada in late 2018, according to previous reports. To secure some of the most important supplies, Huawei has built up chip inventories for its vital telecom equipment business, while also preparing a stockpile of up to two years for key U.S. chips such as Intel’s server CPUs and Xilinx’s FPGAs, among others. .

The reduced availability of Huawei’s products in the market due to the ban could also reduce its competitiveness. On the other hand, due to the weakening of Huawei’s competitiveness, it may also be difficult for users to obtain high-quality and affordable equipment to some extent, which will affect the plans of many countries to build 5G networks.

　

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