Huawei overtakes Qualcomm in the Chinese Smartphone Chip Market

Huawei’s subsidiary, HiSilicon, has overtaken Qualcomm for the first time as China’s largest chip supplier. In general, in China there was a significant decrease in the production of single-chip systems for smartphones compared to the same period last year.

HiSilicon shipped 22.21 million processors for smartphones in the first quarter of 2020, which roughly corresponds to the amount shipped over the same period last year according to a new report by the Chinese company CINNO Research. HiSilicon managed to increase its market share to 43.9% from 24.3% in the first quarter of 2019. Qualcomm and MediaTek took the second and third positions, which occupied 32.8% and 13.1% of the market, respectively.

The CINNO study, which tracks the country’s semiconductor market, does not disclose shipments by Qualcomm or other suppliers, but claims that the US market share in March fell to 32.8% from 48.1% in the same period last year.

HiSilicon creates chips under the Kirin brand, which are installed in Huawei smartphones. Semiconductors are developed by Taiwan Semiconductor Manufacturing Company (TSMC).

The growth of HiSilicon in China reflects the fact that Huawei has been paying more and more attention to its domestic market since last year it was blacklisted in the United States. In May, the U.S. Department of Commerce restricted Huawei’s ability to buy services and components from US firms. As a result, Google was no longer allowed to license the Chinese company its operating system for Android mobile devices. Although in China, where Google services such as Gmail are prohibited, this is not so important, it has had a great impact on international consumers who rely on the use of these applications.

In Q1 2020, shipments of Huawei smartphones grew by 6% compared to last year, according to a Counterpoint Research report released on Wednesday. Huawei is also trying to reduce its dependence on American components, with smartphones playing a key role in this.

Earlier it was reported that senior officials entering the office in the Trump administration have prepared new measures to limit the global supply of Huawei chips. In line with the upcoming changes, foreign companies using US equipment for the production of chips will need to obtain an American license before selling certain Huawei chips.

Since most chip making equipment used around the world relies on American technology, the change will be an extension of the export control authority, which, according to some experts, may not appeal to the American allies.

Huawei’s growth in China has increased its market share for smartphone processors. But this growth also occurred due to the company’s internal competitors, which are one of Qualcomm’s key customers.

In August, Qualcomm CEO Steve Mollenkopf said Huawei’s focus on the Chinese market has hurt the US company. “As a result of the export ban, Huawei shifted its focus to increasing its share in the domestic Chinese market, where we do not see corresponding benefits in product revenue or licensing,” he told investors during a conference call on earnings.

The fact is that Qualcomm sells chips to internal competitors of Huawei, such as Xiaomi and Oppo. According to research firm Canalys, in 2019 the supply of both of these companies decreased.

The overall smartphone market weakened even more after the coronavirus epidemic stopped production activity in most of the country for several weeks. In China, mobile phone shipments fell 23.3% in March after falling 56% in February, government official data showed.

Meanwhile, in the first quarter, Apple iPhone shipments were likely to fall just 1% from last year, Counterpoint Research said.

This is in line with CINNO Research’s semiconductor report, which shows that Apple’s chip market share has remained virtually unchanged. Apple is developing its own chips for smartphones.