While US Commerce Secretary Gina Raimondo was visiting Beijing last week, she witnessed a spontaneous celebration among the Chinese people. But the gleeful outburst had nothing to do with her meetings with Chinese leaders; it was a raucous cheer for the re-emergence of Huawei’s smartphone business.
By disclosing the availability of a new smartphone, the Mate 60 Pro, on the company website, Huawei quietly let customers in China know that it had re-entered the mobile-phone business.
Word on the Mate 60 Pro spread like wildfire on China’s social media. Even though Huawei provided virtually no background information on the new phone, the initial allotment was sold out on the first day.
Visitors to the website can see that Huawei’s smartphone is priced slightly lower than the Apple iPhone 14 with similar functionality. The notable difference is that the speed of Huawei’s phone is greater and meets the specifications of a 5G-capable smartphone.
Third parties immediately took apart the Mate 60 Pro and reported that there was no evidence of any US technology inside the phone. The phone is driven by a Kirin 9000S chip, designed and made in China, and uses HarmonyOS, Huawei’s own operating system.
There are many other technical differences between Huawei’s latest smartphone and its competitors. Bit the essential point to me is that Huawei is back after three years in the wilderness.
In 2019, the US began to levy a series of sanctions on the company denying it access to advanced chip designs and the availability of Taiwan Semiconductor Manufacturing Company (TSMC) to make the chips for them. Each successive restriction was designed to strangle Huawei out of the smartphone business.
Message to Biden administation
In a way, Huawei’s action did have something to do with Raimondo’s visit. The company apparently moved up the unveiling of the Mate 60 Pro to coincide with her visit. To many of China’s netizens, it was Huawei’s way of calling her and the Joe Biden administration’s attention to the fact that no obstruction imposed by the US will keep Huawei down for long.
Huawei has not disclosed how it has achieved the necessary technological advances, but one thing is clear. The company could not have made all the advances without partners in China and without creating a domestic supply chain, from design software and semiconductor fabrication to essential chemicals and materials.
What Huawei has accomplished will ripple through China’s semiconductor industry. Huawei’s experience will facilitate and encourage others to follow. China’s self-sufficiency in semiconductors will only increase.
Previously, China represented almost one-third of the world’s market for semiconductors. Before the US mounted the trade war, it was more convenient for China to buy them than to make its own. Now that it is forced to go on their own, China is, consequently, not importing as much, and total import is declining by double digits annually.
America’s shortsighted strategy to decouple from China will devastate the revenue of leading US providers of advanced chips such as Nvidia and Qualcomm and manufacturers of chip-making equipment such as Applied Material and Lam Research.
These companies will see their comparative advantages dry up. In the near term, they are not allowed to sell to China. In the long term, China will not need to buy from them.
Washington’s policymakers failed to appreciate that China is no technological slouch. When pushed against a wall, China will back its national interest with the needed funds and talent to overcome any obstacle.
It’s time for Washington to accept the fact that efforts to suppress China is a wasteful national priority and damaging to national interests. We Americans will rue the day when our insistence on making China our adversary became a reality.
George Koo retired from a global advisory services firm where he advised clients on their China strategies and business operations. Educated at MIT, Stevens Institute and Santa Clara University, he is the founder and former managing director of International Strategic Alliances. Follow him on Twitter @george_koo.