Huawei does not give up: continue the smartphone business by circumventing the US ban (perhaps)

Huawei continues to suffer heavily from the negative consequences deriving from the Trump administration ban first and Biden then which allows it to do business with US companies only prior granting to the latter of a specific license. Yet for the Chinese manufacturer, the smartphone market continues to offer important revenue opportunities, so it is not surprising that the company is looking for alternative ways to overcome the restrictions. No, the reference in this case does not go to HarmonyOS, but to the possible decision by Huawei to license the resources related to the design of its smartphones to third parties , not subject to the limitations deriving from the US ban .

Reported the news – not officially confirmed – is Bloomberg. According to the source, the Chinese giant is considering whether to grant licenses to Xnova , a division of China Postal and Telecommunications Appliances Co. (PTAC), which is a Chinese state-owned company operating in the smartphone industry. Xnova is actually already selling Huawei Nova smartphones on its e-commerce site, but if the deal goes through, it could offer its own brand smartphones made using Huawei’s projects. Also TD Tech – Chinese telecom equipment manufacturer – could be in the game purchasing the rights to offer smartphones with its own brand, but always based on Huawei’s know-how.

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The advantages of the operation are obvious: Huawei at the moment cannot buy essential components to produce its smartphones, but it could continue to earn through licenses; licensee companies, on the other hand, would not face the same limitations as Huawei: they could therefore buy components themselves from suppliers such as TSMC. Of course, to evaluate how profitable this solution is, it would be useful to know the exact terms of the license agreements, but for now no significant details have been leaked: Blooomberg merely says that the collaborations between Huawei and the aforementioned partners are subject to change as they are still ongoing.

The first estimates on the results of the transaction speak of a total of 30 millions of smartphones that could be like this sold in 2022, a figure including both those produced directly by Huawei and those made by third parties under license . Currently, none of the parties called have confirmed the Bloomberg report; However, Huawei has shown by selling Honor that the confrontation with the United States is a strategy that does not pay. To survive, you may be forced to back down, and licensing could be a good way to apply the principle. That some change of pace is necessary to prevent all the resources accumulated by Huawei in the smartphone sector from being dispersed is suggested by the market analyzes that testify how the Chinese company occupies increasingly marginal positions. According to the latest data from Counterpoint Research, in the third quarter 2021 Huawei recorded a contraction of shipments on an annual basis equal to 84%.

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