After the U.S. Commerce Department placed Huawei on the Entity List for security reasons, Huawei had to create its personal ecosystem which debuted on the Huawei P40 series in 2020. It even unveiled its own Petal Search application that will aid users to locate app stores where they can sideload applications like Facebook and Instagram that they are banned from downloading.
The problem now is Huawei’s HiSilicon chip unit. If you are not aware, the phone brand depends on TSMC to manufacture its cutting edge chips since it is the biggest independent foundry in the world. However, because of the ban in the U.S, things are becoming complicated.
To solve this problem, Samsung and Huawei are currently working on a potential arrangement that would result in Samsung manufacturing advanced chips for Huawei’s 5G networking equipment business. In return, Huawei would give up some of its global smartphone market share to Samsung. This plan could work since Samsung depends more on phones than Huawei. Samsung actually has contracts to deliver 600,000 5G base stations which are powered by HiSilicon chips made by TSMC and that is more vital to Huawei’s bottom line than phones are.
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For Huawei to keep being a leader in the networking provision sector, the company will have to ensure it has a steady supply of advanced chips. And Samsung’s plan is quite reasonable as long as Huawei is not against the idea of ceding its handset market share to the company it was looking to surpass in 2020. Whatever the final decision is, both companies have a lot to gain.