Huawei is increasing the proportion of mobile application processors (APs) from third-party suppliers for its smartphones, reducing use of Kirin chips from its subsidiary HiSilicon Technologies, as a contigency against the US trade ban, according to Digitimes Research.
Multiple sourcing for mobile APs is a necessity for Huawei to maintain its product competitiveness, stable supply and profitability, and the Chinese vendors is likely to add 1-2 vendors to its supplier list for smartphone APs.
While Taiwan-based MediaTek is already a third-party 5G AP supplier for Huawei, the possibility is high for the Chinese vendor to also purchase 5G APs from Qualcomm if the US chipmaker is able to obtain a US license to ship to Huawei.
Huawei has ramped its purchases of MediaTek's midrange Dimensity 800 5G SoCs for the production of its Enjoy and Honor smartphones since the second quarter of 2020 and may also start buying MediaTek's high-end 5G APs in second-half 2020 and 2021.
Digitimes Research has found that Qualcomm were selling more of its premium Snapdragon 865 APs than MediaTek's Dimensity 1000 chips in China in the first half of 2020 thanks to its brand and product image.
Samsung Electronics and China's Unisoc Technologies could also be alternative sources of 5G APs for Huawei, but the two firms will face challenges for selling chips to the Chinese top smartphone vendor. Samsung is a strong competitor of Huawei in the global smartphone market, while Unisoc still lags other rivals in terms of technology development.
Shipments of 5G phones in the China market are expected to reach over 170 million units in 2020 and will continue to grow in 2021.