ARM Severs Relationship With Huawei In A Crippling Blow To The Tech Giant’s Chip Operations
Huawei is in a world of hurt right now, and ARM just delivered another painful blow, perhaps the biggest one of all so far. Following suit with several other US semiconductor companies, ARM is suspending its business operations with Huawei. The move, if permanent, could have a devastating effect on the massive Chinese telecom.
ARM's decision to sever ties with Huawei is in compliance with a recent US ban that prohibits American companies from selling to Huawei without a government-issued license. If taking a broader overview of the situation, this also has to do with the current trade war with China, along with lingering security concerns.
According to a BBC report, ARM sent its employees a memo instructing them to halt "all active contracts, support entitlements, and any pending engagements" with Huawei and its subsidiaries, such as Honor. which just yesterday announced the Honor 20 smartphone series.
The reason this is such a big development and potentially crippling is because ARM's technology dominates the mobile world. Many of Huawei's mobile products have processors and graphics chips that are built from designs it licensed from ARM, including its HiSilicon Kirin 980 SoC. In addition, Huawei sells a range of servers that run on ARM hardware.
ARM explained in its memo that its designs contain "US origin technology," and are therefore subject to the government-imposed ban. The company reiterated the point in statement, simply saying it was "complying with the all of the latest regulations set forth by the US government."
At least outwardly, Huawei is putting on a strong face while an increasing number of US companies suspend operations with the world's second largest maker of smartphones.
"We value our close relationships with our partners, but recognize the pressure some of them are under, as a result of politically motivated decisions," Huawei said. "We are confident this regrettable situation can be resolved and our priority remains to continue to deliver world-class technology and products to our customers around the world."
Some of the other tech giants that have recently cut ties with Huawei include Broadcom, Intel, and Qualcomm. For a moment, Google also dealt a blow to Huawei by yanking its Android license, meaning that future devices would not have access to native Android apps such as Gmail, YouTube, and even the Play Store. However, CNBC reported yesterday that the US Commerce Department had granted mobile phone companies and broadband providers a 90-day license to do business with Huawei. As a result, Google is allowed to support Huawei through at least August 19.
That may end up a short term reprieve, leaving Huawei's longer term prospects in serious doubt. Losing ARM as a business partner is particularly troublesome for Huawei, given that so many of its products use hardware that is based on ARM's designs.
We will be monitoring this situation and will report any significant developments.