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Huawei, along with its chip design subsidiary HiSilicon, has been severely hit by U.S. sanctions. In the Chinese home market, where approximately 80% of all smartphones sold support 5G, it has become ironic that Huawei’s newly released phones will only support 4G. Unisoc, now widely considered as Huawei’s successor as China’s mobile chip champion, has jumped at the opportunity, expecting to supply its entry-level 4G processors to Huawei’s newest phones that target the emerging market. 

U.S. sanctions an opportunity for Unisoc

In line with U.S. sanctions, TSMC has stopped manufacturing Huawei’s in-house processors since September 2020. Third-party suppliers like Qualcomm and MediaTek have also ceased supplying 5G chips to the Chinese mobile maker. 

Consequently, Huawei’s P50 smartphones have resorted to carrying Qualcomm’s 4G-only Snapdragon 888 processors. For the P50 Pro variants, Huawei uses its stockpiled, in-house Kirin 9000 processors, but it lacks the key RF front-end modules largely controlled in U.S. hands. In addition, the Kirin 9000 stockpiles are running out soon. 

Similarly, Huawei’s Nova 9 smartphones, scheduled to hit the market on September 23, support only 4G as well. 

In light of the development, Unisoc, a high-performing subsidiary of the otherwise failing state-owned Tsinghua Unigroup, has seized the chance to leverage Huawei’s global presence, especially in the emerging economies of Africa and South America. T616 and T606, the Unisoc 4G processors expected to power Huawei’s emerging-market phones, especially cater to the energy efficiency needs in those regions with unstable energy infrastructure. 

“Encircle the city from the countryside”

Following Huawei’s demise, Unisoc has emerged as the only Chinese company able to supply 5G chips, and has received various supports from the state sector ever since. For example, the China IC Industry Investment Fund, China’s flagship policy fund, poured in CNY 2.2 billion to Unisoc last year, marking the first investment of the governmental fund’s 2nd phase. In early August, in the largest ever tender process undertaken by a national mobile operator, Unisoc has also become the second largest winner of China Mobile’s 5G module tender process, coming behind Qualcomm. China Mobile is a state-owned corporation as well as China’s largest telecommunications company. 

According to Counterpoint’s latest data, in Q2 2021 Unisoc has already gained a 5% global market share, beating Huawei and joined MediaTek, Qualcomm, Apple and Samsung as the world’s top five smartphone processors vendors. At the end of the year, Unisoc is also aiming for an IPO on China’s Shanghai Stock Exchange STAR Market.

Previously, Unisoc chips targeted the mid and low-end market, but since its T610 4G chips were adopted by Huawei’s Honor 20 phones, other Chinese handset OEMS have become increasingly receptive to Unisoc chips. Notably, as HiSilicon’s “successor”, Unisoc has inherited the former’s core leadership: for instance, Steve Chu, Unisoc’s current CEO, was once HiSilicon’s chief strategy officer. 

In providing 4G chips to Huawei’s emerging market-oriented phones, Unisoc also inherited Huawei’s strategy of overseas expansion: dubbing it “encircle the city from the countryside”, a concept long associated with Chairman Mao’s guerrilla strategy, Huawei partly attributed its rise to prominence to its success in securing the emerging markets. In fact, in the late 90’s, Russia became Huawei’s first overseas market, as the Chinese equipment vendor gradually won multiple contracts laying the telecom infrastructure of Russia, seizing on its economic revival after years of post-Soviet chaos. Afterwards, Huawei expanded into the vast African market, before it finally boosted its presence in the developed markets.

Now, we are seeing Unisoc replicating Huawei’s recipe for success.



Reference: TechNews