Samsung could process chips for Huawei in exchange for market share in smartphones

The U.S. government ban on Huawei was not only extended for another year, but also tightened when it cut off the supply of chips from outsourcing firm TSMC. So the company is looking for everything it can to get a chip supply and maintain its business, even if it has to look to its former rivals.

A recent report suggests that Samsung – Huawei’s rival in both mobile networks and smartphones – will likely provide 5G base station chipsets to Huawei. But in return the price is not cheap.

Huawei is currently a giant both in the telecommunications equipment market as well as in smartphone production. Before facing sanctions from the US government, the Chinese company confidently set a goal to surpass Samsung by the end of 2020.

Although sanctions from the US government have made them abandon their dream of hegemony on the smartphone playing field, they cannot accept losing the telecommunications business – the fever of the whole corporation. Currently, they have many contracts that need to supply 600,000 5G base stations but have lost the supply of 5G transceiver chipset from TSMC, due to a US government ban.

Meanwhile, according to the Electrical Engineering Times, Samsung has set up a small line to produce 7nm chips using only Japanese and European devices. In addition to ASML’s EUV chip engraving machine, Samsung can also use Lasertec’s Japanese chip testing machine. Unrelated to U.S. platform technology, this line can provide chips for Huawei.

Some reports say that Samsung and Huawei are considering an agreement for the Korean giant to process chips for Huawei’s 5G equipment. In return, Huawei will give up significant market share in the smartphone segment for Samsung. While the new electronics are the source of life for Samsung, this business brings little profit to Huawei.

While Chinese chipmaker SMIC is still stuck at 14nm, this is Huawei’s best chance to save its telecommunications business, even if it has to sacrifice the smartphone business. However, it is unclear whether the Chinese company will accept the deal.

Refer to GizmoChina