Your browser does not support JavaScript!

Huawei's Technological Advancements and Market Resilience Amidst International Sanctions in 2024

GOOVER DAILY REPORT June 28, 2024
goover

TABLE OF CONTENTS

  1. Summary
  2. Technological Advancements in 2024
  3. Breakthroughs in Chip Technology
  4. Role of the Chinese Government
  5. Market Performance
  6. Strategic Collaborations and International Relations
  7. Expansion into New Markets
  8. Conclusion

1. Summary

  • The report titled "Huawei's Technological Advancements and Market Resilience Amidst International Sanctions in 2024" investigates Huawei's impressive technological strides and market resilience despite facing international sanctions, particularly from the U.S. It highlights Huawei's substantial advancements in chip technology and smartphone innovation, primarily through collaborations with SMIC and robust state support. Key findings include the launch of flagship smartphones like the Mate 60 Pro and Pura 70 series, breakthroughs in chip manufacturing with SMIC, and the significant role of HarmonyOS in maintaining market presence. The report also delves into Huawei's strategic expansions into new markets such as electric vehicles and AI, contributing to sustained growth and competitiveness in the global tech arena.

2. Technological Advancements in 2024

  • 2-1. Latest Smartphones with Advanced Chips

  • The Huawei Mate 60 Pro, launched in May 2024, represents a significant technological advancement for the company. This device features a 6.82-inch display with a resolution density of 440 pixels per inch (ppi) and a 50-megapixel camera. It's powered by HarmonyOS 4.2.0.130, which provides camera upgrades and improved accessibility. An additional update to HarmonyOS 4.0.0.132 brings enhancements to Wi-Fi and Bluetooth functionalities. The device was launched and made available for purchase in China. This smartphone showcases Huawei's ability to continue innovating in the face of international sanctions, particularly with the use of chips manufactured by SMIC.

  • 2-2. Launch of MateBook 14 2024

  • In addition to their smartphone endeavors, Huawei also launched the MateBook 14 2024. While specific details on the MateBook 14 2024 were not provided in the referenced documents, it can be inferred that the launch signifies Huawei's continued expansion and innovation in its product lineup beyond just smartphones, further solidifying its presence in the technology market.

3. Breakthroughs in Chip Technology

  • 3-1. Collaboration with SMIC

  • Huawei has demonstrated significant advancements in chip technology through its collaboration with Semiconductor Manufacturing International Corporation (SMIC). Despite stringent restrictions imposed by the U.S., SMIC managed to produce advanced 7-nanometer semiconductor chips, an outcome that has shocked many U.S. policymakers. These chips were reportedly utilized in Huawei's Mate 60 Pro smartphones, which marked a substantial breakthrough considering the limitations placed on China’s access to foreign chip technology.

  • 3-2. Self-Aligned Quadruple Patterning (SAQP)

  • The development and implementation of Self-Aligned Quadruple Patterning (SAQP) has been a pivotal factor in Huawei's chip technology breakthrough. This technique allowed for increased precision in chip manufacturing, contributing to the advancement seen in Huawei’s recent technologies. SAQP has facilitated Huawei's efforts to maintain its competitive edge despite U.S. sanctions.

  • 3-3. Impact of U.S. Sanctions

  • U.S. sanctions have had a profound impact on Huawei's technological advancements and market strategy. Enforced restrictions prevented American firms from providing Huawei with technology and software, initially hampering Huawei’s smartphone sector. However, the company adapted by developing its in-house Harmony OS to replace the Android OS, which was no longer available due to the U.S. trade blacklist. Additionally, Senator Mark Warner highlighted how U.S. restrictions aimed to limit China's access to advanced chip technologies, yet SMIC's production of sophisticated chips for Huawei indicated these measures were not entirely foolproof. Huawei's ability to navigate these sanctions showcases its resilience and strategic adaptability.

4. Role of the Chinese Government

  • 4-1. Financial Aid and Tax Breaks

  • The Chinese government has played a crucial role in supporting Huawei amidst international sanctions, particularly from the United States. This support has come in various forms, including financial aid and tax breaks. According to the information derived from the provided reference documents, the financial assistance from the Chinese government helped Huawei to continue its operations and invest in research and development despite the external challenges. These efforts are part of a broader strategy by China to bolster its domestic tech industry and reduce reliance on foreign technologies, thereby enhancing its economic security.

  • 4-2. Support for Domestic Semiconductor Production

  • One of the key areas where the Chinese government has supported Huawei is in the development of domestic semiconductor production capabilities. Due to the U.S. restrictions on advanced chip supplies to Huawei, China has ramped up efforts to produce semiconductor components domestically. The collaboration between Huawei and China’s largest chipmaker, SMIC, has been instrumental in achieving significant breakthroughs in chip technology. This partnership enabled the development of the Mate 60 Pro smartphone, which features a sophisticated processor manufactured with domestic technology, marking a notable achievement in China’s semiconductor industry. Moreover, the enhanced production capacity and technological advancements in this sector have been critical in maintaining Huawei’s market presence and competitiveness.

5. Market Performance

  • 5-1. Sales Growth and Market Share

  • China's Huawei Technologies has experienced substantial growth in sales despite facing international sanctions. According to Huawei's Consumer Business Chairman Richard Yu, the company saw its premium device sales surge by 72 percent in the first five months of 2024. This significant increase is largely attributed to the successful launch of the Mate 60 Pro smartphones in September. Financially, Huawei reported a profit of 19.6 billion yuan ($2.7 million) in the first quarter, a remarkable 564 percent increase compared to the previous year. Moreover, sales during the same period rose by 37 percent, amounting to 178.8 billion yuan ($24.7 billion). Further supporting Huawei's growing market presence, the company saw a 42.4 percent jump in sales during the month-long 618 shopping festival, as per data from Counterpoint Research. This was the largest sales increase among competitors, despite offering the smallest price discounts relative to other major brands.

  • 5-2. Consumer Demand for Huawei Products

  • Consumer interest in Huawei products remains robust, driven by the company's technological innovations and strategic product launches. As of 2024, Huawei has reached 900 million active consumer devices operating on its HarmonyOS system, underscoring the widespread adoption of its technology. The Mate 60 and Pura 70 series, in particular, contributed to Huawei's impressive sales performance during the 618 shopping festival, highlighting strong consumer demand. Despite a challenging international environment and economic concerns in China, Huawei's ability to leverage state-of-the-art technologies like 5G and AI in its devices continues to attract and sustain consumer interest.

6. Strategic Collaborations and International Relations

  • 6-1. Partnerships with State-Backed Enterprises

  • Huawei has strategically collaborated with state-backed enterprises, which has significantly contributed to its technological advancements and resilience against international sanctions. A notable partnership is with the Chinese chip manufacturer SMIC. SMIC has been crucial in providing cutting-edge chip technology essential for Huawei's products, including the Mate 60 Pro phone. Despite international sanctions, particularly from the United States, this collaboration has enabled Huawei to sustain its technological innovation and market presence.

  • 6-2. Global Market Challenges

  • Huawei faces numerous challenges in the global market due to international sanctions aimed at curbing its technological advancements. The United States has actively worked to restrict the flow of advanced semiconductor technology to Chinese chipmakers, including Huawei. This has entailed pushing allies like Japan and the Netherlands to impose similar restrictions on their chipmaking equipment and technology exports. For instance, the U.S. has influenced the Dutch government to regulate the export of ASML's deep-ultra-violet (DUV) semiconductor equipment to China. These restrictions are part of broader efforts to limit China's ability to produce state-of-the-art chips, which impacts Huawei directly.

  • 6-3. Comparative Commercial Success

  • Despite the international sanctions, Huawei has demonstrated remarkable commercial success, particularly in comparison to other global tech giants. The company's successful launch of products like the Mate 60 Pro is a testament to its ability to maintain a competitive edge. Additionally, Chinese policy backing has played a significant role in bolstering Huawei's market presence, providing the necessary support to thrive amid stringent international restrictions. This multifaceted approach of leveraging state support and strategic collaborations has enabled Huawei to navigate through global market pressures and achieve commercial success.

7. Expansion into New Markets

  • 7-1. Electric Vehicles

  • Huawei, traditionally known for its telecom and smartphone business, has ventured into the electric vehicle market. Last year, it launched an electric sedan designed to rival Tesla's Model S. This move is part of Huawei's broader strategy to diversify its business operations beyond telecommunications and smartphones. Although details on the market performance of Huawei's electric vehicles were not provided, this significant step indicates the company's ambitions in the automotive sector.

  • 7-2. Artificial Intelligence

  • In addition to electric vehicles, Huawei has also made significant strides in artificial intelligence (AI). The company has developed its own AI framework, which is composed of its Ascend processors. According to Richard Yu, chairman of Huawei’s consumer business group, Huawei’s AI framework is noted to be 1.1 times more effective in training large language models compared to mainstream international offerings. This development showcases Huawei's commitment to advancing its AI capabilities and positioning itself as a competitive player in the global technology landscape.

8. Conclusion

  • Huawei's market resilience and technological innovation represent a noteworthy success story in the face of intense international sanctions, especially from the United States. Through strategic partnerships with entities like SMIC, the company has achieved significant breakthroughs, specifically in advanced chip technology. State support has also played a crucial role in Huawei's ability to sustain and advance its operations, allowing it to launch successful products like the Mate 60 Pro and Pura 70 series. Despite these accomplishments, the report identifies ongoing international challenges that necessitate continued adaptation and innovation. Looking forward, Huawei's expansion into emerging sectors such as electric vehicles and AI indicates the company's ambition to diversify and strengthen its market position. However, mitigating the impact of global restrictions and fostering further technological advancements will be vital for Huawei's sustained growth and success in the future.

9. Glossary

  • 9-1. Huawei [Company]

  • Huawei is a global technology company headquartered in Shenzhen, China. It is known for its advancements in telecommunications, consumer electronics, and technology infrastructure. Despite facing severe U.S. sanctions, Huawei has showcased resilience through innovations in chip technology and strategic expansions into new markets like electric vehicles and AI.

  • 9-2. SMIC (Semiconductor Manufacturing International Corp) [Company]

  • SMIC is a major Chinese foundry providing semiconductor manufacturing services. It has been pivotal in Huawei's advancements in chip technology, helping the company produce advanced processors despite U.S. export controls.

  • 9-3. Mate 60 Pro [Product]

  • Huawei's flagship smartphone for 2024, the Mate 60 Pro, features advanced chips developed in partnership with SMIC. It is part of Huawei's strategy to reinforce its presence in the high-end smartphone market in China.

  • 9-4. HarmonyOS [Technology]

  • HarmonyOS is Huawei's proprietary operating system, used across its range of smartphones and IoT devices. It has significantly contributed to the company's resurgence in market share, hitting 900 million active consumer devices despite sanctions.

10. Source Documents