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Can Huawei survive without its custom Kirin chips?
A Huawei executive’s recent suggestion that the Huawei Mate 40 series will quite likely be the last of the company’s phones to feature its in-house Kirin silicon was both shocking and inevitable. With US trade sanctions against the Chinese giant now extending as far as foreign chipmakers that use or license and US technology, this prevents TSMC or Samsung from manufacturing chips for Huawei. Without a manufacturing partner, Huawei’s Kirin is no more. Simple as that.
Of course, this would also have a knock-on effect Huawei’s routers, switches, and other bits of hardware that all use Kirin silicon. What happens next is a quagmire of trade rules and weighing up options that may or may not pan out.
Read more: The Huawei and US debacle: The story so far
Huawei could look to China’s own Semiconductor Manufacturing International Corporation (SMIC) to manufacturer Kirin. However, even SMIC uses US-made equipment, so even as a short-term option, it would still stir up trouble with Washington. In addition, SMIC is notably behind on cutting edge lithography technology, sat as it is on 14nm FinFET versus TSMC’s 7nm FinFET and soon to be 5nm EUV processes. SMIC isn’t close to replacing TSMC as a premium-tier manufacturing option.
Without a manufacturing partner, Kirin is no more.
Alternatively, Huawei is still allowed to procure chips from rival designers, providing they aren’t US-based. Qualcomm is obviously out of the question and Samsung doesn’t have a track record of selling large numbers of Exynos chips to outsiders. This leaves MediaTek.
Huawei has already begun using MediaTek chips for some of its more affordable phones. Meanwhile, industry insiders suggest that Huawei purchases from MediaTek will surge by up to 300% this year as a result of the trade ban. Other reports note Huawei has already ordered more than 120 million chips to help cover the Kirin shortfall. Whether Huawei deems MediaTek’s Dimensity 1000 series a suitable premium-tier replacement remains to be seen, but the company may not have much choice if it wants to keep up its sales momentum.
Even with MediaTek as a backup solution, this doesn’t solve the bigger picture problem. By losing Kirin, Huawei’s future phones risk losing almost everything that makes them special.
This is much worse than losing access to the Play Store
Huawei’s Western smartphone hopes were already skewered by the ban on access to Google’s Play Store. The company’s App Gallery alternative, while much improved in recent months, still isn’t a replacement for the ecosystem and apps that smartphone users outside of China are intimately familiar with. As bad as this is, however, the loss of Kirin will be felt outside of the West too.
The first issue is that this latest development impacts all of Huawei’s products, including those sold in China where Google-free phones are the norm. The chip supply issue threatens Huawei’s ability to complete in China, a market the company has become increasingly reliant on as its global appeal stutters. Secondly, and equally devastating, is that without Kirin, Huawei’s smartphones lose their most important unique selling points. Huawei could become just another generic smartphone manufacturer.
Inside the Kirin 990: A tiny 5G, AI, and gaming powerhouse
Huawei’s smartphone reputation is centered on exceptional camera quality. A large part of this is due to the company’s image signal processor (ISP) built into its Kirin chips, which runs the company’s cutting-edge BM3D noise-reduction algorithm and supports its unique RYYB sensor technology. Any future Huawei phones powered by another chip could fall well below the high photography standard everyone expects from the Shenzhen firm.
Almost every single one of each Huawei phone's unique selling points are based on Kirin hardware.
Kirin is also out in front on machine learning thanks to its custom Da Vinci architecture. This lends itself to super-resolution zoom imaging, low-power voice recognition, gesture controls, facial recognition security, and more. This would also halt any integration of the company’s own 5G modem technology and other silicon optimizations.
Huawei can certainly move some of its software and algorithms over to another vendor’s chip. However, there’s no guarantee that they will run as well or as efficiently as they do on the company’s bespoke Kirin processor. The bottom line, Huawei’s phones won’t be the same without Kirin.
Can Huawei survive without Kirin?
There’s little doubt that without Kirin, Huawei’s ability to adapt and withstand the pressures of the US trade embargo is further diminished. Silicon cuts right to the core of Huawei’s smartphone business and its future now seems to rest firmly on who, if anyone, it can find to work with to get around this latest roadblock.
With no sign of a TSMC replacement on the horizon, Huawei may have to find a new close partner in MediaTek. Outside of a few niche releases, MediaTek’s premium 5G SoCs are a reasonably untested entity and aren’t quite in the same class as rival chips from Qualcomm. Undoubtedly, a switch to MediaTek will have repercussions for the performance, capabilities, and probably costs of Huawei’s premium smartphones, which could further eat into their appeal in the West, but also at home in China.
Silicon cuts right to the core of Huawei's smartphone business.
Having just unseated Samsung for the top spot in the mobile industry, it would take some time for Huawei to lose its position as a major smartphone player. However, adapting to the ever-evolving trade ban inevitably means big changes for the company’s products in 2021 and beyond. We’ll have to see if these products sustain Huawei’s current momentum, but with the potential loss of Kirin, the prognosis looks worse than ever.