The Chinese technology group Huawei is planning to relaunch 5G phones as early as next year in order to overcome the stranglehold of US sanctions and regain market share.
The company is blacklisted by Washington for acquiring US technology for 5G smartphones but has developed strategies to circumvent the sanctions, according to three people familiar with the matter.
One approach is to redesign its smartphone without using restricted advanced chips, said two people familiar with the company’s plans. Huawei used to produce Kirin chipsets designed by HiSilicon and manufactured by leading chipmaker Taiwan Semiconductor Manufacturing Co before the US tightened restrictions.
The company is revamping its phones to use less advanced chips from Chinese companies that will enable 5G. The less advanced chips can hurt the user experience, especially when compared to phones from previous generations from Huawei and rival Apple’s iPhone 14.
Huawei, a Chinese national champion gripped by rising geopolitical tensions between Washington and Beijing, is working to regain lost market share after its sales slumped after US sanctions were imposed in 2019. Revenue from its smartphone-led consumer business fell 50 percent the year after that in 2021.
“This company cannot wait forever and needs to bring 5G phones back to market as soon as possible,” said a person familiar with Huawei’s plans.
“Huawei lost its leading position in the mobile phone market years ago due to American sanctions. Now even their domestic market share continues to shrink.”
Another sanctions workaround Huawei is considering collaborating on a phone case product that enables 5G, according to two people briefed on the matter.
There are already phone cases on the market. A case developed by Shenzhen-listed company Soyea Technology has a built-in eSIM module with chips that support 5G connection.
Within weeks of Huawei launching its Mate 50 series in September, China Telecom, a Chinese state-owned telecom conglomerate, began selling the phone with the cases. This year, Soyea also launched phone cases for Huawei’s P50 Pro.
“The company is trying its best to appeal to users at a time when the consumer market is weak,” said a Shanghai-based technology analyst, who asked to remain anonymous for fear of repercussions.
Huawei’s bid to break through US restrictions and reclaim its position as the world’s largest smartphone maker is of national importance for Beijing as it works to develop technological self-sufficiency, analysts said.
“China’s technology self-sufficiency plan could be a potential driver to help Huawei join the 5G competition,” said Will Wong, a Singapore-based analyst at research firm IDC.
But as long as US sanctions are in place, Huawei is at a severe disadvantage, experts say.
“Huawei would take so long to build internally or externally the supply chain it needs to pull this off that we’ll likely be in the 6G era before that’s possible,” said Douglas Fuller, an expert on China’s semiconductor industry.
The sanctions have thwarted Huawei’s plans to take on Apple. Richard Yu, chief executive of Huawei’s consumer business group, admitted in a media interview in July that the group was “the only manufacturer to sell 4G phones in the 5G era,” which he called “a joke.”
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Customers in China have started to object to the high price of Huawei’s phones without 5G services.
“In just a week [after Huawei launched Mate 50]Hundreds of people have turned to me to modify their Mate 50 to support 5G networks,” said Michael Li, a repair shop owner in Shenzhen.
Some customers even brought their Mate 40, a previous-generation Huawei 5G phone, and asked if Li could put chips from old phones into the new one. “Of course that’s beyond my capabilities.”
Huawei did not immediately respond to a request for comment.