Contents

In 2Q 2020, Huawei smartphone sales exceeded that of Samsung’s for the first time ever, becoming the world's largest brand in mobile phone shipments.

Overall market dynamics

  • BeiDou-3’s last global networking satellite has been launched, which means the success of China's BeiDou satellite navigation system and BeiDou network.
    • BeiDou’s satellite system comprises of a space, ground, and user section. The user section can be subdivided into upstream, midstream, and downstream industries.
    • Upstream is the basic component that is mainly composed of a baseband chip, radio frequency (RF) chip, board card, antenna, etc.
    • At present, the 40 nanometer (nm) complementary metal oxide semiconductor (CMOS) is a mature and cost-effective process for navigation and positioning chips. This can provide many advantages such as lower power consumption, lower costs, and lower risks. It will evolve and upgrade to a 22nm CMOS process in the future.
  • The construction of 5G base stations in China has entered a period of rapid development. The originally 600K units are planned to grow to 800K. At present, 400K units have been completed, and China’s 5G mobile phone users have exceeded 100 million.
  • Power semiconductor devices will be widely used in the construction of new infrastructure. Insulated-gate bipolar transistor (IGBT) is the core device for energy conversion and transmission. Shanghai Huahong Grace Semiconductor Manufacturing Corporation (HHGrace) has China’s first 12-inch power device foundry production line.

Industry highlights

  • Huawei’s future is uncertain as US-imposed sanctions continue to escalate, which is having a great impact on the wafer foundry business
    • HiSilicon’s 5nm chip is expected to be the last generation in Huawei’s own flagship platform. HiSilicon’s total shipment volume of 5nm chips is expected to be about 10 million by September 2020 because of the restrictions imposed by the US sanctions on May 15, 2020.
    • SMIC also gradually stopped providing services for HiSilicon wafers.
    • There was a supply shortage of HiSilicon chips for some applications such as video surveillance.
  • Huawei must purchase chips from external partners
    • Huawei issued an order to MediaTek for 120 million units.
    • Huawei signed a patent license agreement with Qualcomm.
  • The National IC Investment Fund Phase II (please refer to the appendix)
    • China’s National IC Fund Phase II, which was established in October 2019, was officially implemented in March 2020; it has amassed ¥200 billion in financing.
  • China’s new national policies to promote the development of the integrated circuit (IC) industry (please refer to the Appendix)

Huawei overtakes Samsung to become the world’s largest brand in terms of mobile phone shipments

Table 1 : Global smartphone OEM shipment ranking

Figure 1: Quarterly smartphone shipments - Huawei vs. Samsung

  • In the second quarter of 2020 (2Q20), Huawei’s smartphone sales in a single quarter exceeded Samsung's for the first time, making Huawei the world's largest brand in terms of mobile phone shipments.

The major components suppliers for Huawei’s flagship smartphone

Table 2: Huawei Mate20X/Mate 30 Pro 5G key component suppliers

Table 2: Huawei Mate20X/Mate 30 Pro 5G key component suppliers (continued)

Table 2: (continued)

  • The semiconductor device suppliers that Huawei buys from are increasingly inclined toward European and Japanese companies.
  • Huawei has been able to achieve self-sufficiency for its main chip package and some key RF components.
  • It is gradually increasing its adoption of domestic semiconductor suppliers (e.g., Goodix, OminiVision, Halo Micro).

Appendix

China’s National IC Fund Phase II

Table 3: China’s National IC Fund Phase II investment list (millions of yuan)

China’s central government’s IC industry incentive policy

Table 4: Policy

Table 5: Import preferences

Table 6: Comparison