Huawei Technologies' chairman said while U.S. sanctions have choked its smartphone business, it will not give up and plans to eventually return to the industry's "throne." Credit: Courtesy Huawei.

In the sci-fi film Terminator, which starred Arnold Schwarzenegger as a cyborg assassin, there was a particular scene, where he appears at a police station, looking for his target.

Having been turned away, he says; “I’ll be back.”

Those words are epic in cinematic history — as the scene followed, the cyborg drove a police cruiser into the station, causing havoc.

Perhaps not quite as dramatic, it appears that Huawei Chairman Guo Ping said pretty much the same thing, in a Q&A with staff, according to a transcript seen by CNBC.

Thumbing his nose at US sanctions, Guo vowed the Chinese technology giant will return to the “throne” of the smartphone industry.

Under the administration of former US President Donald Trump, Huawei was dubbed a national security threat, put on an export blacklist and cut off from key technologies, namely advanced semiconductors needed for its smartphones.

Revenue from Huawei’s consumer division plunged 47% year-on-year in the first half of 2021. The company was once No. 1 in the smartphone market, but has since tumbled out of the top five, CNBC reported.

“The biggest difficulty for us at present is on mobile phones,” Guo said to staff.

“We know that [to produce] phones with small size and low power consumption requires advanced technology. Huawei can do the design, but no one is able to help us to produce. We are stuck.”

One of Huawei’s biggest issues is that Chinese chipmakers do not have the ability to make the cutting-edge semiconductors that the Shenzhen-headquartered company requires.

Guo said, however, Huawei will not exit the smartphone business.

Instead, it will work with partners in order to improve their technology which will in turn benefit Huawei as it could get access to China-produced silicon, CNBC reported.

“Huawei will keep its existence in mobile phone sector,” Guo said. “I expect that as the capability in chip manufacturing increases, [Huawei] will return to the smartphone throne.”

“I hope the day when China is able to make chips can come sooner. Until that day, the sector will exist, and we will try to retain and develop our technologies, to make sure we are able to make competitive phones,” Guo added.

While Huawei has moved as much development and production in-house as possible, including the HarmonyOS operating system, there are some components that have proved difficult to replace, TechRadar.com reported.

The recently-launched P50 smartphone range lacks 5G connectivity due the difficulty in obtaining the relevant chipsets. Meanwhile, there are concerns that the company could eventually run out of its custom processors too.

This disruption has affected sales, as has the sale of the Honor brand which accounted for roughly a quarter of all shipments.

According to figures from Canalys, Huawei was the world’s seventh largest smartphone manufacturer in Q1 2021, with other Chinese vendors making significant strides.

The company has denied US claims that its equipment poses a security risk and said the sanctions are economically motivated.

Earlier this year, Shanghai China-based Semiconductor Manufacturing International Co. (SMIC) and the Shanghai government announced the development of a new US$12 billion plant to focus on its 14nm and smaller lithography.

SMIC’s new factory was one of the dozens of new projects funded by the Shanghai regional government to create a self-sustaining supply chain for electronics production.

Producing its own 7nm wafers is particularly relevant for the company after being added to the United State’s trade entity blacklist in late 2020.

This new manufacturing plant currently has targeted output of 35k 12-inch wafers per month.

This will be a drop in the bucket compared to SMIC’s current 385k 8-inch and 195k 12-inch wafer production, but it is significant because this fab will make up a large portion of the company’s sub-14nm production.

SMIC’s new 7nm node, announced in October of last year, will be produced at the new factory.

Sources say this node compares well to competing nodes from other semiconductor manufacturers in all but performance, leading to tailoring the output to low-performance/low-power uses.

In the meantime, Beijing Economic-Technological Development Area (BDA) also marked the construction kickoff of another SMIC plant in the Chinese capital, with planned investment of US$7.6 billion, Asia Financial reported.

The Beijing facility, slated to be China’s largest 12-inch wafer plant, will be focused on more mature technologies – 28 nanometer and above.

The SMIC Beijing plant was among 129 key projects totaling 400 billion yuan (US$62.2 billion) of investment that made the BDA their new home. 

Not everyone is convinced that China will soon match Taiwan’s or South Korea’s semiconductor powerhouse industries, of course, but one thing is for certain, Guo seems hell-bent on bringing Huawei back to the top in this chip game of thrones.

Sources: CNBC, TechRadar.com, Silicon.co.uk, NotebookCheck.net, Asia Financial