Why Samsung Can But Doesn't Want to Supply Chips Huawei

In fact, Huawei has a way out of the situation that the US government has driven it into. Despite the fact that it was banned from using Google, the company was almost able to turn the tide and start building its app store normally. Now she has been banned from buying chips from companies that are manufacturing or legal in the United States. Here it is more difficult to solve the problem. As a result, we got a situation in which Huawei runs the risk of ending up in a broken trough and being left without processors at all. It will indeed be a disaster, but Samsung can save the day, if it wants to.

Why Samsung Can But Doesn't Want to Supply Chips Huawei

These two can be both partners and competitors.

US Sanctions Against Huawei

According to a recent report from DigiTimes, such a partnership and mutual assistance between Huawei and Samsung, if you can call it that, is unlikely to happen. This is due not only to global market sentiment, but also to how companies view such partnerships in the future and what kind of competition exists between them now.

Insiders once again point to the ongoing wave of US sanctions and other actions against Huawei. The government has made working with the company, with the exception of a few small concessions, so difficult that former partners find it easier not to mess with it and lose a large client than the entire business.

Recently, attempts by the United States to move some manufacturing facilities inland have further complicated the situation. Basically, the government forced various manufacturers to choose between working with Huawei and working with American companies. The US is encouraging manufacturers to do this. In some cases, this is done very cleverly. For example, it is said that companies must manufacture equipment in the US if they want to operate and sell their products in the US market. At the same time, those companies that manufacture their products in the USA or under patents owned by American companies are prohibited from supplying equipment Huawei. Here is such a multi-move.

Where Huawei will buy processors

As a result Huawei is forced to look for solutions within the country or new partners who are not bound by this rule. Samsung could become one of such partners, as it is not surprising. It just so happens that this company does not use components made in the United States. They have factories in other parts of the world and some of the chips the company makes are not outright banned. This could be a real salvation for Huawei and suit her as an option for a “alternate airfield”, but there are also subtleties that prevent her from doing this.

Why Samsung Can But Doesn't Want to Supply Chips Huawei

Samsung can save Huawei, but somehow doesn't want to.

Analyst reports indicate that the companies were very close to reaching an agreement and that Samsung could indeed start shipping its chips to Huawei so that it could continue to manufacture its hardware. However, while we are talking about telecommunications equipment. In particular, about the network, which is needed for the production of network deployment tools 5G. That is, Samsung could share wireless chips for a “moderate” fee, but some peculiarities of the situation prevented the companies from taking the last step towards each other.

The fact that the fee was moderate is not in vain written in quotes. Judging by the information, Samsung charged an exorbitant amount of money for its services. In such a situation, it can be assumed that she simply set a stop price so that it would not be an outright rejection, but forced Huawei to refuse to buy chips for that kind of money. Or maybe Samsung just decided that things Huawei were so bad that it would be willing to pay any money just to continue production and keep the company. Moreover, TSMC, MediaTek, Qualcomm and many others in fact simply cannot work with Huawei even if they wanted to.

If the stop price was placed at the last moment, this could be for two reasons.

Why Samsung doesn't want to sell Huawei its chips

The US government could not directly ban Samsung from working with Huawei, but it could well apply some kind of sanctions against Samsung in the future. It is not even ruled out that some threats were received just before the signing of the agreement. As a result, Samsung either simply decided to scare away Huawei with a price, or raised the price in order to neutralize the risks, having immediately received a large profit.

Another reason could be that in April of this year, albeit temporarily, but Huawei was able to overtake Koreans in sales of smartphones in the world. Could this somehow affect the deal? It could, because, on the one hand, it could be a blow to Samsung's reputation, and on the other, why should they once again feed their competitor.

Why Samsung Can But Doesn't Want to Supply Chips Huawei

For many Huawei these are smartphones, but this is just the tip of the iceberg.

The joint work Huawei and Samsung would bring together the two largest equipment manufacturers in the world. But this did not happen and, most likely, it will not happen.

Why Huawei shouldn't be left without processors

This is bad for consumers all over the world, because we risk losing a serious player in the market. It's like those fans Android who claim that Apple is bad and wants her to go broke. They simply do not understand the basic laws of the market, according to which competition spurs product development and quality improvement. If it weren't for Apple with its own iPhone, Android wouldn't be so cool. Also Apple would not have achieved what she has if it were not for Android – smartphones. It is competition that makes products do better, otherwise why spend billions on improvement if “it’s okay”?

It is too early to say that Huawei will go broke soon. While she has a small margin of safety. The ban on the supply of components does not apply to orders that were placed before it took effect. As a result, Huawei still has the necessary chips to provide itself six months or a year of normal operation. During this time, the management will need to find a way out and put things in order. The problem is that it is impossible to create completely your own processors from scratch in such a time. That is why the company faces a difficult task, on the solution of which its future depends.

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