The Wall Street Journal reports Huawei Manages to Make Smartphones Without American Chips.
American tech companies are getting the go-ahead to resume business with Chinese smartphone giant Huawei Technologies Co., but it may be too late: It is now building smartphones without U.S. chips.
Huawei’s latest phone, which it unveiled in September—the Mate 30 with a curved display and wide-angle cameras that competes with Apple Inc.’s iPhone 11—contained no U.S. parts, according to an analysis by UBS and Fomalhaut Techno Solutions, a Japanese technology lab that took the device apart to inspect its insides.
In May, the Trump administration banned U.S. shipments to Huawei as trade tensions with Beijing escalated. That move stopped companies like Qualcomm Inc. and Intel Corp. from exporting chips to the company, though some shipments of parts resumed over the summer after companies determined they weren’t affected by the ban.
Meanwhile, Huawei has made significant strides in shedding its dependence on parts from U.S. companies. (At issue are chips from U.S.-based companies, not those necessarily made in America; many U.S. chip companies make their semiconductors abroad.)
Huawei long relied on suppliers like Qorvo Inc., the North Carolina maker of chips that are used to connect smartphones with cell towers, and Skyworks Solutions Inc., a Woburn, Mass.-based company that makes similar chips. It also used parts from Broadcom Inc., the San Jose-based maker of Bluetooth and Wi-Fi chips, and Cirrus Logic Inc., an Austin, Texas-based company that makes chips for producing sound.
Yet Another Trump Trade Win
- Trump cut off supplies so China looked elsewhere.
- Trump changed his mind.
- This is what constitutes a win.
“When Huawei came out with this high-end phone—and this is its flagship—with no U.S. content, that made a pretty big statement,” said Christopher Rolland, a semiconductor analyst at Susquehanna International Group.
Huawei executives told Rolland that the company was moving away from American parts, but it was still surprising how quickly it happened.
This was likely going to happen anyway, but Trump escalated the speed at which it happened.
Trade Deal?
- Reuters reports U.S.-China Trade Deal ‘Stalled Because of Hong Kong Legislation’
- MarketWatch reports China ‘Insists’ on Tariff Rollbacks as Part of ‘Phase One’ Trade Deal
Sources in Beijing informed the Global Times that China insists the tariffs must be rolled back as part of the first-phase trade deal. A US pledge to scrap tariffs scheduled for December 15 cannot replace the rollbacks of tariffs. #ChinaUSTrade #TheBusinessSource pic.twitter.com/5IJuHMuTNM
— The Business Source (@GlobalTimesBiz) December 1, 2019
Standard Assumption for 17 Months
Assuming there is a deal, the standard assumption for 17 months, Trump will announce two key elements.
Greatest Deal in History
- China will resume buying the same amount of soybeans as before.
- China will resume buying the same amount of chips as before.
The longer this takes the more wins there will be.
With that in mind, please recall Another Trump Tariff Success Story: Vietnam.
And despite the fact that Trump’s China Tariffs Made Matters Made the Global Manufacturing Recession Worse and has killed US farmers, It’s important to remember, Trump is collecting “huge tariffs”.
So please brush aside this recession warning: Freight Volumes Negative YoY for 11th Straight Month.
Mike “Mish” Shedlock
Yes, and it started long before Trump. Obama banned supercomputer chip sales in 2015. They still sold supercomputers, just without U.S. chips. The cows were let out of the barn decades ago. link to appdevelopmenttexas.net
Anyone who actually follows tech knows China started developing their own domestic chip fabrication industry more than a decade ago. Producing computer chips domestically has been China’s objective for far longer than that
Naive to suggest this is in any way related to the media’s trade war (and just because Trump taunts them like the idiots that they are, doesn’t excuse the media).
But people with Trump Derangement Syndrome see absolutely everything through that lens and no other way. They cannot accept that many events were put in motion years ago and would have happened no matter what the Kardashians do. A lot of events are outside the control of the US media
Trump is the greatest president ever! The american people really deserve it!
Fundamentally cell phone technology was still invented by the US Military and used during WW2. The notion that some chip produced in a non-US country doesn’t rely on the US anymore is quaint.
By that logic, we should all be paying royalties to France and the estate of Louis Pasteur for damn near everything we use in modern life for food and medical care. Besides being unreasonable, it is never going to happen.
I didn’t say anything about payments. The reliance will always be there irrespective of payments or whatever monetarily happens. You are correct about everything but the royalties. One reason most countries don’t attempt to steal IP is because they do have respect for the process of innovation and debt of gratitude for whomever made those innovations.
I think it is safe to say that US WWII era cell phone tech is public domain today, so I am not sure what your point is other than to suggest the US deserves some sort of recognition for that. Only the historians care.
In the world which I am familiar, the usual reason IP is licensed instead of stolen is because the cost of licensing is cheaper than the penalty for stealing. Given enough time, all useful IP released into the wild should eventually become public domain because that is how the human condition improves, by encouraging as many people as possible to build on the past work of others. Exactly how much time should pass and how much money should be paid before private IP becomes public is a matter of debate. Under a communist system, all private IP instantly becomes public domain. That has been China’s system. Under that system, there is little incentive for anyone to spend much effort innovating. As@njbr pointed out on this thread, if China wants innovation to blossom within its own country, it will eventually be forced to adopt some sort of IP law for itself if not for the purpose of interacting with outsiders. It might as well link the two together.
A look at China’s goal to become 40% self sufficient in chips by 2020 and the recently released IP protection policy.
(quote)
….Another part of the problem is that China is not producing enough top-rank engineers to fulfill its own needs. This creates a situation in which Chinese companies are competing with each other to attract top local talent. China’s Internet companies are making a lot of money, which means they can pay high wages. IC companies cannot always offer competitive salaries, however, which puts them at a disadvantage when trying to attract top talent.
Part of the issue is the lack of sufficient protections for IP. Companies and individuals want assurance they will be able to profit from their innovation, specifically so that they can afford to offer competitive salaries. This is why President Xi Jinping and Premier Li Keqiang favor strict protection for IP rights and are recommending severe punishments for violations of IP rights.
“This is not for the Americans,” said Dai. The implication is that Xi and Li are not making promises to mollify the U.S., which has long expressed displeasure about China’s approach to IP. The politicians’ desire to provide stronger protection for IP is legitimate.
Dai said, “It is to protect the investment in the country and in local R&D companies. Because if you don’t protect the bottom line, the whole industry will be very bad. In short, if your company makes money, you can pay the employees high wages. Please don’t rely on the state to pay for the salaries.”
https://www.eetimes.com/document.asp?doc_id=1334555&page_number=4
(end quote)
So two takeways from that–progress toward 40% self sufficiency is being made, and that the recently released China IP protection policy is directed at internal competition to allow internal businesses to grow. Who knows what its international competitors will experience.
Mercantilism on stolen IP steroids: The perps, China in this case, understandably think it’s a good deal. It is…for China, and the communist party is delighted to claim the credit for disgusting, failed collectivism.
The world is sitting back quietly giggling at Trump’s flopping about trying to gain consensus, while their own living standards are sliding to China.
The problem with this approach to problem solving, (letting the U.S do it), is that the eventual conflict resolution has always been via war.
There’s historical precedent: Rome finally, and utterly, destroyed Carthage in 146 B.C. Little noted today was that Rome also conquered Corinth, Greece in the same year, underscoring the fact that no culture could co-exist with Rome’s. Ditto China…eventually.
America can be destroyed as well, even by its own dumber population.
Automation will replace underpaid labour of third world countries though not sure what we are going to do
Why is this surprising? Cell phone technology is old. The most sophisticated part is the screen and almost all the good screens are made by Samsung and LG.
Lots of reverse engineering is continuously going on by all parties on all sides in tech. The question here is, once a company like Huawei has been completely shut off from suppliers such as the US, what incentive do they have not to blatantly copy any components previously purchased legally? If China’s government does not enforce IP law, then Huawei will logically use other suppliers to copy whatever they need, as they have probably done here.
This situation likely represents the nut of the IP issue that the US and China have been disputing. It appears China expects the Trump administration is bluffing and has called. Will the Trump administration fold or not?
Id imagine a lot of reverse engineering going on for things they cant make yet, or things they couldn’t in the past.
You’re obviously lacking in more technology in the present.
Did I miss it? I don’t see where the high tech parts that they are using are made. This seems like a very important factor. Do theChinese actually have the technology, or are they just buying from Japan or Europe?
In a world with more production capacity than consumption capacity it’s a dangerous tactic to force your buyer to make a choice between suffering and finding a new supplier.
Well, they are using US Patented IP to build them, but who cares if they are paying royalties or stealing it.
Well, read the story… an analysis by UBS and Fomalhaut Techno Solutions, a Japanese technology lab that took the device apart to inspect its insides….
That’s the real world–ANY manufacturer’s item can be taken apart, analyzed by a specialized reverse-engineering firm, and remade by anyone else who is willing to walk a close line to patent law. That is the modern world.
Which is why those same pesky Chinese, are doing such a cracking job at copying Toytota reliability at half the cost……..
But hey, you can do the same thing. Nothing is stopping you. Start tearing apart a Corolla, then “easily” make a “copy” on the cheap. Now why didn’t those dullards in Detroit think of that???
I hear you, Stuki. There is a legitimate argument to be made that IP laws are abused to the point of enriching a few at the cost of restraining everyone else’s quality of life, and therefore they are a bad thing that only a patent lawyer could love. Somewhere between providing a strong incentive for research and innovation and increasing the standard of living for the world, there is a compromise to be had. Lord knows, there is no sense to what is happening now where companies make a business model out of not producing anything while patenting everything imaginable on paper, so that they can shake down any person or company who independently makes a go of actually doing something useful.
“Somewhere between providing a strong incentive for research and innovation and increasing the standard of living for the world, there is a compromise to be had.”
As@njbr posts below, China seems to be working towards that.
They just may (I wouldn’t hold my breath, as I just don’t trust commies…) get somewhere useful. At least they have the important ingredients in place: The biggest stakeholders are building stuff. Efficiently.
Which gives them very different motivations than in the US, where the goal is not to provide some basic protections for new stuff inventors build, but rather simply to enrich useless but connected dilletantes, whose great grandfather may have drawn a mouse on a napkin a century ago, or whom The Fed printed up money for so they could “buy a patent portfolio”; and who now wants taxpayers help in shaking down the rest of the world over it.
People who have to work for a living care.
About being able to obtain decent value for the money they had to work for. Instead of being forced to grossly overspend, solely to enrich some privileged and connected, useless patent-troll, and the army of worthless ambulance chasers running around abusing US courts to do his bidding.
US corporate boardrooms are packed with MBAs, most of whom have handled a copy of Sun Tsu’s “The Art of War” and some of the greatest disciples of Onan will display it proudly in their offices as a mark of their management competence.
Sadly, none of them read it or if they did, heeded the contents. Meanwhile China followed the centuries old lessons and used US corporate greed and self interest to scoop them hollow and leave them to rot.
Centuries? Try millenniums old.
But ask yourself, can the US manufacture phones or other electronics without Chinese chips? Bonus if you are aware how much of America’s sensitive military technology has at least on Chinese chip in it.
Unless things have changed very recently, You can source from outside China. But not from outside Asia. And once your volume requirements go up, you may well have no choice but accepting some Chinese input.
Which is, of course, completely effing irrelevant. The Chinese could build nukes decades ago. That arguably does matter. While America can’t really manufacture even pineapples and coffee in volume, instead being dependent of places led by often rather unsavory governments.
Talk about irrelevant non-issue, bandied about for no other purpose than to rile the dumb ones sufficiently up about irrelevant nonsense, that they no longer pay attention to what matters: Theft by debasement, “legal” “interpretations” and other entirely domestic abuses.
Very generally: Country A’s population is largely free to route around whatever country Bs government does. Hence, Country B’s government can’t really do people in Country A much harm, as Country A’s population will just choose to not play along.
None of which holds wrt Country A’s population, when faced with Country A’s government. Once you can’t route around, you are captive. Hence ripe for bleeding. People with brains more functional than those of dishrags, intuitively grasp this. Which is why publicly funded indoctrination is so important for those benefiting from the bleeding. But also, over time, why a nation of dishrags-for-the-benefit-of-connected-dunces, will never last long. After all, armed Muzzie trumps pliant dishrag any day of any week.
Thanks to our politicans and the corporate oligarchy who turned over all USA technology to China in the search for higher profits at any cost. We enabled China to leap-frog decades of having to learn on their own by giving them the complete plans to all our technology as they acted as a manufacturing subsidiary of our corporate oligarchs.
Now China does not only not need the USA any longer, but they are expanding worldwide on all fronts, making huge investments in Africa, the Middle East, South America and even Europe. They are expanding their military and making storing inroads into space, with plans to land on the moon and build a moon base by 2030, something we should have done back in 1980, 10 years after we landed on the moon. Nero is fiddling for the USA. China is going to be the #1 power in the world in the next decade and we will all have to learn to use their currency.
I think that an equally important path of technology transfer is Chinese engineers working in America and Chinese students studying here.
Which is just fine with liberals.
Just like the guy who first put a hacked off section of lumber under a barrow, ended up giving “us” all “his” technology. And your teacher gave you “her” reading skills. And your mom “her” language.
Man, the amount of stuff you have “stolen” from people. Trump should tweet something about what a thief you are! And do something! Ban someone! Be stupid! But loud about it!
“Be stupid! But loud about it!”
You are doing an awful good job following those guidelines in your postings here!
China won’t resume buying as many chips as before. They don’t have to. Production of everything have been moving Asia for decades. Because that’s where people and organizations most competent at producing stuff are located. There’s nothing strange and magical about “chips” that renders them impervious to that trend.
As for Soybeans, once your erstwhile trading partner demonstrates massive unreliability, you don’t go back to being as reliant on him as you were before.
Interesting. Your musings read like propaganda from a member of the Fifty Cent Army. As for soybeans, the CCPS (Chinese Communist Party State) can purchase soybeans any time they desire. Additionally, Asians are no more competent at producing stuff than any other people in the world.
” Asians are no more competent at producing stuff than any other people in the world.”
Asian organizations as are.
Hence why they are the ones whose output the world increasingly seek to buy with their hard earned money.
Has little to do with “Asian” ethnicity. If productive people there, had to carry as much deadweight, in the form of ambulance chasers, apparatchiks, banksters and other negative value add rabble, on their backs as the ever dwindling group of productive Westerners do, Asians wouldn’t be any more productive than “we” are, either. So far, they do not, though. Which is pretty sad, considering at least China is straight up communist….
The tariff talks appear to be stalled on IP and removal of tariff issues, i.e., they are not going anywhere.
“Talks” never go anywhere. After all, it’s just talk.
The great decoupling continues.