Huawei running out of smartphone CPUs as US sanctions begin to bite

Huawei will halt production of its flagship Kirin chipsets later this year, due to US sanctions on Chinese companies. Production of the Chinese firm’s Kirin and AI-powered chips, both of which are used to power its handsets, will be forced to stop on September 15 as a result of US sanctions on its suppliers, said Richard Yu, …

[Anonymous Coward]

Kirin will become Karen

Anything Huawei had as tech in its Kirin processor, can simply be farmed out to other Chinese makers. So unless you're planning to sanction all Chinese chip makers this is a non-issue.

Realistically you cannot sanction all Chinese chip makers because of this:

https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)

Chinese GDP is 27 trillion, USA 20 trillion, EU 18 trillion, India 11 trillion. It isn't that GDP of China has suddenly shot up, USA massively inflated their dollars, PPP GDP doesn't recognize the fake US $ the Fed prints as GDP, so it tends to balloon "manufacturing and services" countries over "prints money and hands it to billionaires" countries.

They'll change the name from "Kirin" to "Karen" and it won't be manufactured by Huawei, but business is business.

I can't help but think Xi would have been better to give Trump his quid-pro-quo, it would have done less harm to the US economy. Look at Mexico and NAFTA, a quick meeting, some quid-pro-quo exchanged, and the cancelled NAFTA becomes NAFTA 2, slightly more favorable to Mexico, but ultimately also, less damage to the US economy.

https://edition.cnn.com/2020/06/17/politics/bolton-book-trump/index.html

[kernel_panic]

Re: Kirin will become Karen

"can simply be farmed out to other Chinese makers"

I strongly recommend you read up on the effort required to manufacture any chipset of any architecture 7nm or lower (or ask Intel as per their latest earnings call). It's not as simple as you say. It takes time to shift away from someone like TSMC who has been doing it for a long time. The shift WILL happen, but it will take a bit of time.

[Anonymous Coward]

Re: Kirin will become Karen

@"I strongly recommend you read up on the effort required to manufacture any chipset of any architecture 7nm or lower "

You miss the point, other Chinese makers are not restricted, so its a simple signing of the contract that turns a Kirin into a Karen.

Poof one minute those ARM variant chip designs are owned by a Huawei subsidiary with the customer as Huawei, the next by Karen Corp, with the customer as some other chip company.

[Marcelo Rodrigues]

Re: Kirin will become Karen

"...the next by Karen Corp, with the customer as some other chip company."

I can't help but read "Kraken" instead of "Karen".

Much better marketing too: "Release the Kraken!" sounds so much better...

[Roland6]

Re: Kirin will become Karen

>I can't help but think Xi would have been better to give Trump his quid-pro-quo, it would have done less harm to the US economy.

But why would Xi (or any other non-US leader) do anything to stop Trump shooting himself in the foot?

[katrinab]

Re: Kirin will become Karen

I don't think they would call it a Karen. That sounds like the sort of useless thing a Trumpian would produce.

https://www.dictionary.com/e/slang/karen/

[Anonymous Coward]

Re: Kirin will become Karen

@Karen

Rename the "Kirin 990" to the "Karen 911", launch with a slogan "the new Karen 911, takes your breath away" to mock his followers.

Yeh maybe not. It might be fun to prod Trump, but it would be insensitive and unprofessional given what's about to hit the USA.

Wave 1: 'its just the flu', 140000 dead

Wave 2: 'the cure is worse than the disease', 280,000 sentenced to death, they just don't know it yet

Wave 3: "kids need to die because Trump cannot admit his mistakes", 1000s of super-spreader events across schools, millions of dead.

Even if they have a vaccine in October, they will already be infected, it will be too late.

Thanks to Trump and and his army of Karens.

/digress

Yeh it will be called the "Phytium 990" or something like that.

[EnviableOne]

Re: Kirin will become Karen

even if they have a vaccine in october, the ANti-Vaxers wont let them take it, so it wont offer herd immunity .......

[Charlie Clark]

Re: Kirin will become Karen

Probably will in most places it will: current research suggests the threshold is 40 - 60% of the population and even in the wackiest parts of the US (of which there are a lot, and boy are some of them wacky) don't have enough of the anti-vaxers to make a difference and the low mortality rate will do the rest.

[Charlie Clark]

Re: Kirin will become Karen

Trump's cack-handed handling of Covid-19 might well cost him the election (retirees in Florida spring to mind) but it's not relevant here and your disaster scenario is way overblown. Yes, there will be many more deaths but still in the hundreds of thousands, not millions. Deaths / 100,000 the US is still below a number of European countries, though it is getting "there".

[I ain't Spartacus]

Re: Kirin will become Karen

PPP doesn't mean China are richer than the USA. In this case it's exactly the opposite, it means they are poorer. PPP means purchasing power parity and is a different way of comparing international ecnomies that reflects that wages are lowers in those countries (i.e. workers are poorer). As workers are of course the consumers, who buy things, by definition them having less money means they are poorer. Of course it also means that services are cheaper, because wages are lower, so it's not all downsides. It's important to know this because when you compare, say defence budgets, a country with lower wages is going to be getting more bang for their buck - so long as they're buying home made military equipment.

Your point about the US inflating the dollar is exactly the reverse of reality though. If the US had really inflated the dollar, that would mean the value of the dollar would have fallen - thus meaning that the Chinese economy would be closer to parity with the US on the normal measure of GDP. But in fact the dollar has been strong for the last 10 years, because the US have generally had strong growth.

In fact the Chinese have been forced to intervene into the market to raise the value of the Yuan - reversing the trend from the first decade of this century when they were desperately buying US T-bills in order to reduce the Yuan's value and hence artificially lower the wages of their workers. Which made the country as a whole poorer, but grew the economy due to the cost advantage it gave their exporters. However, despite a continuing current account surplus, China still exports more than it imports, that process has reversed since about 2014 - because China has been suffering from slow-motino capital flight. i.e. Chinese businesses don't trust their own government and so export profits abroad, so they can't be stolen / legitimately siezed / (more likely) a bit of both, in Xi's anti-corruption drives. Hence the Chinese Central Bank's foreign reserves peaked at about $4 trillion in around 2012 - and have now fallen to somewhere closer to $2tr now - as they've intervened in the currency markets.

The US were the only one of the major economies to have already reversed some of the QE they were forced to do in the last recession - because their economy has been doing so well.

[Anonymous Coward]

Re: Kirin will become Karen

@"PPP doesn't mean China are richer than the USA. In this case it's exactly the opposite, it means they are poorer. "

No, GDP measured by PPP or Nominal, both metrics are bigger = better.

@"Your point about the US inflating the dollar is exactly the reverse of reality though. If the US had really inflated the dollar, that would mean the value of the dollar would have fallen -"

No, because the numbers are priced in US dollars. The less valuable the dollar, the more dollars China's manufacturing and services are in those dollars. Hence the apparent boom in Chinese GDP PPP.

"The US were the only one of the major economies to have already reversed some of the QE they were forced to do in the last recession - because their economy has been doing so well."

No, they slashed taxes, with unfunded debt. The Fed stepped into buy the debt last October. Which creates dollars, so an economy whose size is listed in dollars will increase. i.e. QE under a different name sold as 'interest rate control'.

https://www.bloomberg.com/news/articles/2019-10-11/fed-to-start-buying-60b-of-treasury-bills-a-month-from-oct-15

"Fed to Start Buying $60 Billion of Treasury Bills a Month From Oct. 15"

[Anonymous Coward]

Futile

The power of the US consumer has limits, and each time these powers are wielded in a trade dispute they become weaker as Chinese business looks for ways to further increase industrial autonomy and protect supply chains.

[Charlie Clark]

Cnutism

SMIC, the Chinese fab of choice, can't produce the Kirin chips, yet. But it's surely only a matter of time before it can, though this may take a couple of years. But Huawei isn't making the handsets with the kind of margins that Apple has, so it can afford to sit this out for a couple of years, or maybe only months. In the meantime it will continue to make money with mobile network deployments around the world.

But the trade spat is simply encouraging China to become less dependent upon US-controlled technology, surely not a good thing for the US in the future.

[cyberdemon]

Re: Cnutism - not a good thing indeed

> But the trade spat is simply encouraging China to become less dependent upon US-controlled technology, surely not a good thing for the US in the future.

This.^

It's a bad thing not just for the US, but for UK, Europe, non-Chinese Eastern states.. Basically "the free world" and anywhere where privacy is a thing.

If you think the supposed CIA backdoors in Intel Management Engine are bad, just wait till China starts making its own chips.

If China decided that it was ready to go it alone in electronics tech, it would be extremely bad (for the West). They could decide to stop supporting US chip designs e.g. "Sorry, that BGA footprint looks like an Intel XYZ - We can't process this PCB for you - new management policy". We could be stuck with expensive and slow western PCB fabs. They could go as far as deciding not to ship parts, only complete products (locked down and backdoors pre-installed).

What's worse, is if China are able to become completely technologically and economically independent from the rest of the world, they could make a bid for domination. I fear that could provide the conditions for WWIII.

[Anonymous Coward]

Re: Cnutism - not a good thing indeed

@"If you think the supposed CIA backdoors in Intel Management Engine are bad, just wait till China starts making its own chips."

I'm not sure which backdoor is more dangerous right now.

I once asked the question: if Russia attacked Europe, would Trump be on Europe's side or Russia's side? It makes you think about the worst case scenarios and prep for them. but you should hopefully be able to answer with confidence "Europe's side", even if you plan to defend against the worst case.

Since then we've found out Russia has been killing US troops in Afghanistan and Trump's been providing Russia with intel and laying down political cover for those killings. Faced with the question: "if Russia attacked USA, would Trump be on USA's side or Russia's side?" the answer is apparently "Russia", he's backstabbing his own troops.

Hopefully it will awaken the need in everyone to eliminate their backdoors swiftly. I notice a lot of 'zero day suddenly found' stories, and I'd like to think this is the 'good guys' realizing how dangerous it was for them to think those backdoors would only be available to the 'good guys'.

[cyberdemon]

Re: Cnutism - not a good thing indeed

> I once asked the question: if Russia attacked Europe, would Trump be on Europe's side or Russia's side?

Given their history, it would be "nobody's side" - ie "neutral", profiting as much as possible by selling arms to both sides, and then only weighing in when both sides are weak enough that they can pick a winner, stomp on the loser, and take credit for the victory.

[Charlie Clark]

Re: Cnutism - not a good thing indeed

What's worse, is if China are able to become completely technologically and economically independent from the rest of the world

This is highly unlikely, which is why it is so heavily involved in ensuring its energy and commodities supplies around the world. China has different priorities to the West but closing itself off again is currently one of them.

[Anonymous Coward]

"encouraging China to become less dependent upon US-controlled technology,"

China was already on that track - and the current situation was just helping it. This way it can be delayed.

Remember how long it took to them to make ballpoints.... if you don't steal technology, developing it can be hard.

[Charlie Clark]

Re: "encouraging China to become less dependent upon US-controlled technology,"

Maybe, but the delay is now manageable: Trump has been trailing this for years and it's not as if China hasn't significantly improved its engineering capacity over the last twenty years or so. The scores of patents associated with mobile communications and other tech stuff testifies to the fact that Chinese universities no longer produce excellent copyists.

[Automatic]

Re: Cnutism

SMIC aren't at the most modern nodes yet but they have started making the Kirin 710A on their 14nm FinFET process which I guess should satisfy the entry to mid-range market. At the right price and feature set, Huawei could settle in that market segment in the Chinese domestic market and perhaps beyond, till a time comes for them to expand upwards.