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Monday, February 26, 2024

Huawei Poised to Make Comeback in Mid-Range 5G Phone Market

SHENZHEN, China (Reuters) – China Huawei may launch a mid-range 5G phone in October, China I.T. Times reported on Tuesday, which would be another sign the technology giant has overcome U.S. sanctions. Since 2019, the United States has restricted Huawei’s access to chipmaking tools essential for producing the most advanced handset models, with the company only launching limited batches of 5G models using stockpiled chips. The restrictions devastated the consumer business of a company that had rivaled Apple and Samsung to become the world’s largest smartphone maker before plunging into a slump in 2021. The company has since adjusted its strategy, moving away from ODM white label operations, focusing on its brand and offering high-end smartphones.

In the past three years, Huawei has worked hard to develop a domestic semiconductor supply chain capable of replacing the American chips it previously relied on for its flagship handsets. This has included setting up joint ventures with local companies, buying land and buildings to build its factories, and hiring thousands of engineers to design microchips and software.

The company re-entered the global market with its low-cost Mate series smartphones last year and surprised the industry when it unveiled a flagship phone capable of running 5G networks. Known as the Mate 60 Pro, it was released with little advertising or warning, but research firms have confirmed that it is powered by a 7-nanometer chip developed in China. The phone will be the first such device to hit the global market since U.S. sanctions began in 2019.

Sources told the I.T. Times that Huawei is preparing to launch a 5G version of its mid-ranged Nova around October or November. The company has yet to respond to requests for comment.

Huawei is also working to make its own 5G base stations, the small mobile units that transmit data to and from wireless towers. The company has said it focuses on markets with high 5G penetration rates and the best prospects for growth, including Europe and Latin America.

A recent letter from Republican lawmakers to Commerce Department Secretary Wilbur Ross calls for establishing a new China-facing sanction authority to impose “full blocking sanctions” on Huawei and its chipmaking arm SMIC, a unit of state-owned China Telecom. It also asks that the company be investigated for security violations and for criminal charges to be pursued against its executives.

EqualOcean analyst Yuri Gu believes that the launch of a mid-range 5G phone demonstrates that Huawei can adapt and overcome obstacles. However, he said, it is essential to remember that smartphones are not a core business for the company. In the long run, Huawei will likely seek to expand its offerings to include home and enterprise routers and servers rather than focus on smartphones as a critical product line.

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