The recent US ban on sales to Chinese technology giant Huawei could cost the company $30 billion in revenue, according to Huawei’s CEO. That’s a significant hit for a company that made $104 billion in revenue last year. But Huawei claims it can survive without US tech.
We analyze the internals of phones, tablets, and laptops regularly. As part of every teardown, we identify most major chips and components. We’ve seen devices made from all sorts of combinations of vendors and technologies. Can Huawei, or anyone, build a phone without any US technology?
We posed this thought experiment to our teardown team, an experienced group of analysts with years of experience researching the internals of the gadgets we all use everyday. The answer is: probably. But! There are two big challenges. One, you have to convince all the necessary parties to work with you. Two, you have to be willing to forgo some of the latest, flashiest technologies.
You know those stories where the hero has to convince important people, one by one, to join their rebellion, despite how much more convenient it would be to just surrender and stick with the status quo? And those iconoclast rebels also have to learn how to work together, despite their hodge-podge of talents and motivations? Huawei’s future could look like that, except with vibration motors and RF transceivers instead of sword-makers and clan leaders.
The Trouble Huawei Is In
The roots of the US’s modern-day conflict with China over global trade start in mid-2018; Vox offers a 500-word explainer on how we got here. As part of that war, or perhaps in an uncanny coincidence, the US developed security concerns about Huawei, the world’s largest maker of telecommunications gear and the second-largest maker of smartphones. On May 15, the hammer came down: US tech suppliers were barred from working with or exporting materials to Huawei without special approval.
Some people might hear that and think, “Isn’t everything inside a phone already made overseas?” And that’s not entirely wrong. But phones are also software, and hardware made in Asia can be designed and controlled from the United States.
If the export ban holds, Huawei will lose access to Google, which licenses the more feature-filled Android most customers are accustomed to. UK-based chip designer ARM also suspended all Huawei business, citing its US-based divisions and some US-born technology. ARM provides the architecture designs for Huawei’s CPUs, even those made by their own subsidiaries. Both of those cut-offs could be stalled by temporary reprieves, but a future without ARM and Google support is terrifying for Huawei.
If losing its primary software and processor architecture wasn’t bad enough, 33 of Huawei’s 92 core suppliers are based in the US, according to the Wall Street Journal.
Huawei is not the first overseas phone and tech maker to face this kind of pipeline shut-off. ZTE admitted in 2017 to selling US-made technology to Iran and North Korea. The company paid $890 million in penalties, and said it was disciplining senior company officials. But in April 2018, the US put ZTE on a seven-year export ban after the Trump administration claimed ZTE lied about its punishments for the executives who violated US sanctions. In May 2018, ZTE, the second-largest smartphone maker in China and fourth-largest in the world, said it had to shut down, because it couldn’t operate without Google’s Android, Qualcomm’s chips, and other US tech. Less than two months later, ZTE and the US government reached a deal, and ZTE resumed business.
Why Can’t Huawei Just Make Everything Itself?
On its face, Huawei is less reliant on US tech than ZTE, because it has its own semiconductor company, HiSilicon Technologies. We tore down Huawei’s P20 Pro in April 2018, and found four HiSilicon chips in it, though in mostly secondary roles. Roughly 27 percent of the P20 Pro’s semiconductors come from HiSilicon, according to The Wall Street Journal, citing ABI Research. US-based components make up about 7 percent of the P20 Pro. It’s not clear what that 7 percent represents; if it’s the main CPU of the phone, that’s a very important percentage to replace.
HiSilicon can make chips for Huawei now, and perhaps fill out the remaining pieces. The company alluded to backup plans for “self-reliant technology” in internal memos. But even its own Kirin processors are made in a Taiwanese facility that relies on US equipment.
To keep up with the ridiculously fast-paced semiconductor business, Huawei needs two components hard to get outside the blacklist: specialized software to make circuit blueprints, and chip architecture licensed by ARM. Chip blueprinting tools are made by Synopsys and Cadence, both based in California. While Huawei’s CEO said in May that Huawei has a long-term ARM license, it’s unknown whether that only guarantees access to current technology, or future tech that other companies will jump on.
Quoted in that very informative Wall Street Journal article is a former chip designer, who suggests that open-source or alternative sources exist for chip-making software and core designs. That is technically true, but the free tools are difficult if not impossible to use on increasingly tiny phone chips. The chip designer sees “36 months of midterm setback” for Huawei. Not stated, in hardly any coverage, is what kind of punishment would befall Huawei, a company favored by China’s government, if it chose to ignore copyrights or intellectual property to utilize software or pursue new chip designs for phones no longer sold in the US.
One expert in the semiconductor industry told us that Huawei can’t design a modern chip without impinging on ARM’s intellectual property, and that breaking away to design its own chips would be difficult, at best.
Going it alone in the smartphone component business is remarkably difficult. For evidence of this, look to the epic FTC lawsuit against Qualcomm. Ars Technica’s analysis shows how Qualcomm, which cornered the market for certain cellular modem chips, bent Apple, Motorola, Lenovo, and other companies to its will. Executives testified about their companies being potentially sunk by not being able to find a supplier that could meet their demands.
Large manufacturers rely on specialty hardware manufacturers like Qualcomm (also included in the US blacklist) because it costs hundreds of millions of dollars to engineer and produce components from scratch, and they are only viable for a limited amount of time before technology advances. Huawei makes its own modems—part of the US’ concerns is the company’s dominance in future 5G technology. But making every single component of a smartphone is something not anyone—not Apple, not even Samsung—can do right now.
But if any firm could get there eventually, it’s probably Huawei.
The Bare-Essentials Phone Huawei Could Build Right Now (Maybe)
Enough of the complex realities of the international semiconductor business. Let’s build a Whitelist Frankenphone.
There are a lot of companies out there that may not need to follow a US export ban. The big ones you’ve likely heard of include LG, Samsung, and Toshiba. There are powerful industry players like MediaTek, SK Hynix, and ST Micro that could be in the mix, too. We use “might” and “could be” here because some of these companies could be leaned on by their US partners, have considerable US assets, license essential technology from US companies, or may simply not wish to supply Huawei for competitive reasons.
But, based on research into the companies’ history, offerings, and facility locations, iFixit writers and engineers have assembled a Whitelist Frankenphone from not-definitively-US sources. It’s not the best phone you can build right now, but we think it has the minimum gear to compete in 2019. It’s missing one big component—the primary CPU—which depends on either HiSilicon or MediaTek being able to provide a chip that doesn’t rely on blacklisted design software or ARM technology. And it’s a non-exhaustive list; smaller suppliers may exist for each piece we’ve filled out.
Besides that: here is the phone Huawei could build right now.
- ✔ Display (Samsung or LG)
- ✔ Glass (Asahi Glass)
- ✔ Battery (Huawei)
- ✔ Cameras (Sunny Optical)
- ✔ Fingerprint Sensor (Goodix)
- ✔ Microphones (Goertek)
- ✔ Vibration Motor (DMEGC)
- ✔ USB-C port (Hooya)
- ✔ Loudspeaker (Goertek)
- ❓Processor (HiSilicon/Kirin or MediaTek?)
- ✔ Memory (SK Hynix or Samsung)
- ✔ Flash Storage (Samsung or Toshiba)
- ✔ Power management ICs (HiSilicon or NXP or ST Micro)
- ✔ Front-end Modules
- ✔ Cellular modules (Murata or HiSilicon?)
- ✔ WiFi / Bluetooth module (HiSilicon or Murata)
- ✔ GNSS receiver i.e. GPS stuff (ST Micro)
- ✔ RF transceiver (HiSilicon, NXP, or Murata)
- ✔ Audio codec / amplifiers (HiSilicon, NXP or ST Micro)
- ✔ Inertial module (ST Micro)
- ✔ Pressure sensor (ST Micro)
- ✔ NFC controller (NXP)
This phone does not look too bad on paper! It’s a realistic phone that can be made, if we assume that some kind of primary processor can be found or spun up quickly. It wouldn’t warrant a media event where Huawei announces that they’ve pushed the smartphone world forward. And we haven’t pinned down exactly what state Huawei’s own operating system is in yet: either in development for seven years, or maybe licensed from Russia, or some variant based on Android’s open-source bits.
But if the US is sincere in walling off US components from Huawei, this looks like a starting point for their way forward.
This Ban Could Be Temporary, but the Impact Permanent
US Treasury Secretary Steven Mnuchin told Reuters that the US could ease restrictions on Huawei if China negotiates on trade disputes. It’s hard to imagine how such a compromise could be justified for a company accused of engaging in espionage for the Chinese government. But then again, ZTE sold US technology to its most notable antagonists, and its exile only lasted four months. More than 600 companies have written in opposition to the Huawei ban, and Broadcom’s Huawei-depleted earnings dragged the market down.
But even if the ban lifts before too long, the long-term effects of this freeze-out may already be crystallizing. Huawei’s chip-making arm CEO referenced the Long March that brought Mao Zedong to power in his internal email about the US ban:
To prepare for a scenario that we never thought would happen, thousands of sons and daughters of HiSilicon embarked on the most tragic and solemn long march in the history of technology. … Fortunately, everything comes to him who waits. We succeeded in developing diverse technology and devices.
Huawei, and China, have a lot of resources to put into achieving true independence from US technology. A lack of a CPU and mature OS, and outright antagonism from the world’s largest economy, are big hurdles.
But even now, we can draft a phone that exists outside the US blacklist, minus two pieces for which Huawei may soon have an answer. What will come of Qualcomm, Broadcom, ARM, and other firms if they lose Asian business to the competitor the US forced into existence?